Japan’s Financial Services Agency is set to approve the country’s first yen-backed stablecoin by autumn, marking a notable shift toward domestic digital currency adoption, Nikkei reported. Tokyo-based fintech JPYC will register as a money transfer business this month, clearing regulatory hurdles for what could become a significant alternative to dollar-dominated stablecoins.
The approval comes as global stablecoin market capitalization has surged past ¥36.8 trillion ($250 billion), with the vast majority pegged to the US dollar. JPYC’s token will maintain a 1:1 peg with the yen, backed by bank deposits and Japanese government bonds.
The venture has attracted backing from Circle Ventures, the investment arm of USDC issuer Circle, which participated in JPYC’s ¥500 million ($3.4 million) Series A funding round in 2021. The company has set ambitious targets, aiming to issue ¥1 trillion ($6.8 billion) worth of tokens within three years.
JPYC executives suggest the stablecoin could create substantial demand for Japanese government bonds, potentially mirroring how major US stablecoin issuers have become significant Treasury buyers. This prospect carries particular weight given Japan’s debt-to-GDP ratio exceeds 250%, the highest among developed economies.
While the initiative promises to enhance cross-border payments and reduce foreign exchange risks for domestic businesses, questions remain about whether a yen-pegged token can compete effectively in a market overwhelmingly dominated by dollar-based alternatives.
