Japan To Approve First Yen-Backed Stablecoin As JPYC Gains FSA Approval And Circle Investment

Japan Moves To Approve First Yen-Backed Stablecoin Amid Expanding Global Market

Japan is preparing to introduce its first homegrown stablecoin tied to the yen, setting the stage for a major shift in how digital assets interact with the country’s financial system.

The Financial Services Agency (FSA) is expected to grant approval this autumn, with fintech firm JPYC leading the launch following its registration as a licensed money transfer business.

How The JPYC Stablecoin Will Work

JPYC’s token will operate at a one-to-one peg with the Japanese yen, supported by highly liquid assets such as bank deposits and government bonds.

Consumers and businesses will be able to apply for the digital yen by making bank transfers, after which the equivalent amount of tokens will be deposited directly into digital wallets.

Unlike some international issuers that build private chains, JPYC plans to issue its token across existing public blockchains.

The company is required to keep reserves exceeding 100% of the maximum amount issued in a given week, with strict rules for depositing collateral within three business days.

These measures are designed to assure stability and protect users.

Backed By Circle And Japanese Investors

JPYC’s path to approval has been strengthened by major financial backing.

In 2021, Circle, the issuer of USDC, invested in JPYC through Circle Ventures.

The company went on to raise around 500 million yen in a Series A round, attracting support from listed firms including Asteria, Densan System, Persol, and Aiful.

Founder of JPYC Noritaka Okabe confirmed that both direct and corporate venture capital investments were made, with some undisclosed listed companies also participating.

The startup has also partnered with domestic financial giants such as Mitsubishi UFJ Trust and Hokkoku Bank, expanding its reach into Japan’s traditional finance sector.

Could Stablecoins Become Buyers Of Japanese Government Bonds?

Beyond payments, JPYC could have broader consequences for Japan’s bond market.

Okabe suggested on X that yen stablecoins may function as “absorption machines” for government debt.

He pointed to the US, where leading stablecoin issuers such as Tether and Circle have become major buyers of Treasurys to back their tokens.

“JPYC will likely start buying up Japanese government bonds in large quantities going forward.”

Okabe argued that countries slow to adopt stablecoin frameworks risk higher borrowing costs as they miss out on a new wave of institutional demand.

Regulatory Leadership In Asia

Japan has steadily built a comprehensive framework for stablecoins.

Laws passed in 2022, which came into effect in mid-2023, restrict issuance to banks, licensed money transfer companies, and trust firms.

These rules require strong asset backing and redemption procedures, creating one of the strictest regimes globally.

The FSA’s stance places Japan ahead of other major economies still debating policy.

While the US continues to argue over legislation and China maintains restrictions on most crypto activity, Japan has opened the door to both domestic and foreign stablecoins.

Earlier this year, Circle’s USDC became the first foreign-issued stablecoin approved for circulation in the country, listed initially on SBI VC Trade.

A Growing Market Dominated By The US Dollar

The decision comes as the global stablecoin sector has swelled to over $286 billion, dominated by dollar-pegged assets such as Tether’s USDT and Circle’s USDC.

Until now, Japanese consumers and businesses have largely relied on these foreign-issued tokens.

JPYC’s approval introduces a local option that could reduce exposure to foreign exchange risk while fostering greater experimentation with blockchain-based payments.

Is Japan Ready For A Digital Yen Ecosystem To Compete With Dollar Dominance?

Coinlive believes Japan’s entry into the stablecoin market is more than symbolic.

By tying digital tokens directly to the yen and anchoring them in government bonds, JPYC could reshape liquidity flows in domestic finance.

Yet its success will hinge on adoption.

Can a yen-backed token gain meaningful traction in a market where dollar-based stablecoins already dominate and enjoy global network effects?

The challenge for JPYC will be moving beyond a domestic payment tool to prove its value in cross-border finance and institutional markets.

If it cannot scale, Japan may still find itself in the shadow of dollar-backed stablecoins despite its early regulatory clarity.