Japan is preparing to approve the first stablecoin listed in yen to promote the modernization of digital finance. This reflects a commitment to strict regulation alongside the adoption of new technology.
The first yen stablecoin is expected to be issued by fintech JPYC, aimed at diverse applications beyond the conventional cryptocurrency market, promoting cross-border payments and DeFi within Japan's financial ecosystem.
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JPYC will be the first entity to issue a yen stablecoin, applying a 1:1 system, backed by cash and government bonds.
Stablecoins are expected to support many financial sectors such as international remittances, business payments, and DeFi.
Japan applies strict yet supportive regulations, creating a clear legal framework for stablecoins to operate and develop.
Who is JPYC and what is their role in the yen stablecoin in Japan?
JPYC is a fintech based in Tokyo, currently completing its money transfer business registration with the Financial Services Agency of Japan (FSA) – the final step before issuing the yen stablecoin. Their token will be pegged at a 1:1 ratio with the yen, backed by deposits and Japanese government bonds (JGB).
JPYC has set ambitious goals, expecting to issue stablecoins worth up to 1 trillion yen within the next three years, equivalent to approximately 6.78 billion USD. Many strong investment funds have expressed interest, indicating high demand for tightly regulated yen stablecoins in the market.
In which areas will the yen stablecoin be used aside from cryptocurrency?
Unlike many stablecoins primarily used in cryptocurrency trading, JPYC's stablecoin aims for broader applications such as international remittances, business payments, and DeFi (Decentralized Finance). This enables individuals and businesses in Japan to transact faster and at lower costs within a tightly regulated financial framework.
This continues to promote the integration of blockchain technology into traditional financial activities, opening up opportunities to upgrade the payment system towards greater efficiency and transparency.
How does Japan establish regulations to support simultaneous control of stablecoins?
Legal preparations began in 2022 with amendments to the Payment Services Act, classifying fiat-backed stablecoins as 'Electronic Payment Instruments,' only allowing licensed organizations to participate in issuance. By 2023, stablecoins were defined as 'currency-denominated assets,' ensuring a control framework while opening the door for applications.
Not only does this create a clear legal framework, but this policy also helps maintain a balance between technological innovation and risk governance, building trust among domestic investors and users.
Japan could become a model for integrating regulated stablecoins into the traditional financial market, creating significant appeal for government bonds and institutional investors.
Okabe Noritaka, CEO JPYC, 2024
How will the issuance of stablecoins impact the Japanese government bond market?
JPYC believes that the presence of yen stablecoins could boost demand for Japanese government bonds (JGB), similar to how US organizations like Tether and Circle use US Treasury bonds as collateral. This could affect interest rates and attract more institutional investors to the Japanese bond market.
Conversely, countries that are slow to adapt to regulated stablecoins may face higher borrowing costs due to missed opportunities to attract new capital flows.
How have major organizations participated in the stablecoin game in Japan?
In addition to JPYC, major banks such as Sumitomo Mitsui Financial Group are also planning to issue stablecoins in collaboration with blockchain partners. Circle has been approved by the FSA to allow USDC to operate on the SBI VC Trade exchange and is about to expand to Binance Japan, bitbank, and bitFlyer.
The participation of major banks and financial corporations shows that stablecoins are being perceived as a mainstream part of Japan's financial ecosystem, promising to drive digital transformation and the development of the digital economy in the near future.
When the market stabilizes and the legal framework is complete, major banks will strongly enter the stablecoin field, opening a new era for digital finance.
Brian Moynihan, CEO Bank of America, 2024
Frequently Asked Questions
How does the yen stablecoin work?
JPYC's yen stablecoin is pegged at 1:1 to the yen, backed by cash and Japanese government bonds, aiming to create stability and trust for users.
Who can issue stablecoins in Japan?
Only licensed organizations such as banks, trust companies, and registered providers are allowed to issue stablecoins under Japanese law.
How do stablecoins help with international remittances?
Stablecoins allow for faster money transfers, lower costs, and still operate within a tightly regulated financial system, making it convenient for businesses and individuals.
Which organizations are participating in the Japanese stablecoin market?
In addition to JPYC, there are Sumitomo Mitsui Bank, Circle, and blockchain companies developing integrated stablecoin solutions in Japan.
How does Japan's regulation support and control stablecoins?
Japan classifies stablecoins under the law as 'Electronic Payment Instruments' and 'currency-denominated assets,' ensuring transparency and legal rigor while still facilitating development.
Source: https://tintucbitcoin.com/stablecoin-nhat-ban-sap-duoc-phe-duyet/
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