What happened?
The Financial Services Agency (FSA) of Japan is expected to approve the issuance of the country's first yen stablecoin 'JPYC' by fintech company JPYC Inc. as early as this month (August 2025).
JPYC will maintain a fixed exchange rate of 1:1 with the yen, with its value fully supported by highly liquid assets such as bank deposits and Japanese government bonds. The entire operation will be subject to strict regulation under Japan's (Payment Services Act), ensuring the safety of user assets and preventing money laundering risks, positioning it as a safe 'electronic payment tool' rather than a high-risk cryptocurrency asset.
The launch of JPYC will bring localized new options to the Japanese market, directly competing with dollar stablecoins already circulating in Japan. In the long run, if the yen stablecoin becomes widespread, the behavior of issuers purchasing Japanese government bonds as reserve assets may impact the bond market and accelerate the digital transformation of Japan's overall payment system.
Japan's first stablecoin is about to launch
The digitalization process of Japan's financial system has reached an important milestone. According to reports from (Nikkei), the Financial Services Agency (FSA) of Japan is expected to approve the first issuance of a yen-denominated stablecoin, with Tokyo fintech company JPYC Inc. taking the lead. This also represents Japan's formal embrace of digital assets linked to fiat currencies under a strict domestic regulatory framework.
Background of issuer JPYC and the stablecoin mechanism
JPYC Inc., established in 2019, is a fintech company focused on blockchain technology and digital assets. The company has actually been laying out in the stablecoin field for a long time and raised approximately 500 million yen in a Series A funding round in 2021, with notable investors including Circle, the issuer of the USDC stablecoin.
However, the 'JPYC' token was classified at the time as a prepaid tool rather than an electronic payment tool, and therefore is not legally considered a stablecoin. The biggest issue is that while fiat currency can be exchanged for JPYC, it is not allowed to be exchanged back to fiat currency, functioning more like a prepaid voucher with limited use and application.
The soon-to-be-issued JPYC stablecoin will maintain a fixed exchange rate of 1:1 with the yen, which means '1 yen = 1 JPYC.'
The value behind the yen stablecoin is supported by highly liquid assets, including bank deposits and Japanese government bonds, to ensure price stability. Technically, JPYC will be issued as an ERC-20 token on the Ethereum blockchain and will also support multiple blockchains, including Polygon and Shiden.
💡ERC-20 is a set of 'technical standards' or 'universal rules' for creating cryptocurrencies (tokens) on the 'Ethereum' blockchain.
Consumers or business users can apply to purchase through bank transfers, and equivalent JPYC tokens will be sent to their digital wallets. This operational model is similar to the US dollar stablecoins with a global market capitalization of over $286 billion.
Regulatory Framework and Market Application Potential
Currently, Japan's regulation of stablecoins has three main focuses, with the core spirit being 'safety first, treating it as licensed electronic money.' Therefore, only Japanese financial institutions such as banks and licensed money transfer companies can issue yen stablecoins. This ensures that issuers are regulated formal entities by the government.
Additionally, the amount of stablecoins issued must be matched by equivalent yen deposits or safe government bonds stored in banks to ensure the value of the stablecoin, allowing users to exchange back to real yen at a 1:1 ratio at any time.
As for cryptocurrency exchanges, if they want to list this kind of stablecoin, they also need to obtain specialized permission and strictly comply with anti-money laundering regulations to protect user safety.
The Financial Services Agency of Japan views this approval as an important step in promoting a safe digital financial ecosystem domestically. The emergence of the yen stablecoin is expected to facilitate cashless transactions, reduce the costs of international remittances, and provide new solutions for corporate payments.
However, stablecoins are also associated with concerns about money laundering, illegal transfers, and systemic risks.
In this regard, the Financial Services Agency emphasizes that JPYC's operations will be fully incorporated into Japan's (Payment Services Act) regulatory framework, with stricter monitoring and compliance obligations added. The JPYC company also commits to prioritizing compliance with regulations.
Market Competition and Long-term Outlook
Currently, the Japanese market is not unfamiliar with dollar stablecoins. For example, the exchange SBI VC Trade, operated by the SBI Group, has listed the dollar stablecoin USDC.
It is worth noting that the issuer of USDC, Circle, is also actively laying out in the Japanese market, officially launching USDC in Japan this March and planning to expand its listings on major exchanges such as bitbank and bitFlyer.
In other words, the future success of the yen stablecoin JPYC will depend on whether it can achieve widespread adoption among local users more quickly in this dollar stablecoin-dominated field.
Looking ahead, the potential of the yen stablecoin is not limited to payments. JPYC CEO Noritaka Okabe pointed out that the yen stablecoin could have a profound impact on Japan's bond market. He cited the United States as an example, where top stablecoin issuers have become major buyers of US Treasury bonds. He predicts that if JPYC gains popularity, 'JPYC is likely to begin purchasing Japanese government bonds in large quantities in the future,' injecting new institutional demand into the Japanese government bond market.
Moreover, the yen stablecoin could integrate with financial innovations such as e-commerce platforms and digital securities markets, and may even become a bridge for the future Central Bank Digital Currency (CBDC) in Japan, further accelerating the digital transformation of Japan's payment infrastructure, reshaping consumer behavior and corporate finance.
References: beincrypto, cointelegraph
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