• Japan prepares to launch its first yen-backed stablecoin, boosting domestic digital finance innovation.
• JPYC stablecoin aims to drive demand for Japanese government bonds and reshape financial market liquidity.
• Yen-pegged stablecoin to rival dominant dollar tokens, offering traders new settlement and risk tools.

The Financial Services Agency (FSA) in Japan is in progress to certify the first stablecoin pegged to the yen towards fall this year. The action signals a breakthrough in the Japanese digital finance world. 

Japanese fintech JPYC will be managing the launch after registering as a money transfer business in Tokyo. Currently, the stablecoin will be supported by securities, bank deposits, and government bonds, which are stable and can be seen by both users and institutions.

Also Read: Coinbase Revives Stablecoin Bootstrap Fund to Amplify USDC Liquidity in DeFi

The JPYC will be pegged to the Japanese yen, with one JPYC token equalling one Japanese yen token. Tokens will be bought by individuals and corporations with the use of bank transfers and will have a form of electronic wallets. The framework allows creating a stablecoin fiat-based for the first time in Japan, and this is also consistent with global trends in the use of regulated digital currencies.

JPYC Yen Stablecoin to Reshape Bonds

The market value of stablecoins has risen to be worth $286 billion worldwide. The industry is now routinely dominated by dollar-pegged tokens like USDT and USDC, created by Tether and Circle, respectively. Such U.S. dollar-backed coins are already legal in Japan, but a version denominated in yen has been absent. The JPYC launching will seal that breach and widen the currency foundation in the market.

Source: CoinMarketCap

According to Okabe, one of the representatives at JPYC, yen stablecoins could transform the Japanese bond market. He cited the U.S., where the issuers of coins are purchasers of Treasuries that are some of the biggest. 

Okabe believes that JPYC may create demand for the Japanese government bonds in case of adoption. He cautioned that nations that reacted too late to release stablecoins could face increased bond yields and a deteriorated demand.

Japan’s Stablecoin Push

The plan is part of the overall agenda by Japan to regulate digital finance. Among other things, Circle got the FSA to approve the entry of USDC into the country earlier this year. USDC was introduced in March on SBI VC Trade, a cryptocurrency exchange that is supported by SBI Holdings and Circle Japan KK. The approval was the initial moment in which foreign tokens endorsed the native regulation system.

Circle has indicated that it will give USDC access to Binance Japan, bitbank, and bitFlyer. These are the biggest exchanges in the country; their daily volume exceeds $25 million, and the traffic is high as well.

As far as policymakers are concerned, coins have become part of monetary policy. If the JPYC gains widespread circulation, the company could become a significant buyer of Japanese government bonds.

This may affect the rate of interest and increase the liquidity in the financial markets. Regulators consider such tendencies as the reasons to increase the pace of frameworks of domestic digital assets.

The JPYC being approved by Japan may enhance the rank of the yen in international digital finance. The project offers investors a domestic stablecoin option and aligns with U.S. market practices.

Also Read: $1.82 Billion Stablecoin Surge Hits Binance: Key Reasons Behind the Influx