Japan To Approve First Yen-Backed Stablecoin This Autumn

Japan Awaits Approval for First Yen-Backed Stablecoin

Japan’s crypto landscape is on the cusp of a major revolution as the country is gearing up to launch its first yen-backed stablecoin this autumn. Tokyo-based fintech firm JPYC is pioneering the effort with its eponymous token, pegged 1:1 to the Japanese yen.

Japan Launches JPYC

According to local reports, Japan is set to launch its inaugural yen-backed stablecoin, JPYC, as early as this autumn. The token will be issued by Tokyo-based JPYC, a company that intends to register as a money transfer business with the FSA in August, with token sales slated to begin shortly after.

Notably, the Payment Services Act considers stablecoins as 'currency-denominated assets,’ setting them apart from other cryptocurrencies. Pending approval under Japan’s revised Payment Services Act, stablecoin will be fully collateralized by highly liquid assets, such as bank deposits and Japanese government bonds, ensuring its stable 1:1 peg to the yen.

Japan's Crypto Regulation

Significantly, Japan has been taking efforts to set a comprehensive crypto regulation, in a bid to foster innovation. Earlier this year, the country's FSA announced its plans to launch new rules to prevent fraud and insider trading. 

Japan has been proactive in regulating stablecoins, starting with amendments to the Payment Services Act in June 2022 that classified fiat-pegged assets as Electronic Payment Instruments.' The new rules limited issuance to licensed banks, trust companies, and registered service providers.

Now, JPYC plans to issue ¥1 trillion ($6.78 billion) worth of its yen-backed stablecoin over the next three years, having already garnered interest from several hedge funds. The upcoming asset will facilitate carry trades, allowing investors to exploit interest rate disparities between currencies with the added stability and reduced risk of a yen-pegged digital asset. It will also be leveraged for international payments and asset management services via blockchain technology.

Stablecoins Gain Momentum

Interestingly, Japan's potential launch of a yen-backed stablecoin comes on the heels of similar initiatives in other global powers. Especially following US PresidentDonald Trump's efforts to establish clear regulations for dollar-pegged cryptocurrencies, other countries are also showing growing interest in these tokens.

Recently, the US passed the controversial GENIUS Act, forming a solid foundation for stable assets in the country. Subsequently, countries like South Korea are also putting efforts into introducing laws that govern these assets.

Currently, the global stablecoin market is showing growing momentum, with a market cap of $286 billion. Led by the US dollar-pegged USDT, the market is poised to show further growth shortly as more countries are embracing it.