The FSA is expected to approve JPYC this autumn, which could have a significant impact on Japanese government bond demand.
Japan's Financial Services Agency (FSA) is preparing to approve JPYC as the country's first Peg stablecoin this autumn. This move marks an important turning point in Japan's financial digitization strategy and could reshape the domestic government bond market.
According to a report by The Nihon Keizai Shimbun, the Tokyo-based fintech company – JPYC will register as a money transfer business this month and lead the implementation process. This is the first time Japan has allowed the issuance of a stablecoin pegged to domestic legal tender, opening a new era for the local stablecoin market.
JPYC is designed to maintain a fixed exchange rate of 1 JPY = 1 yen, backed by highly liquid assets such as bank deposits and Japanese government bonds (JGBs). After receiving purchase orders from individuals or businesses, tokens will be issued through bank transfers to digital wallets. This mechanism ensures transparency and safety for users in Japan's strictly regulated environment.
The approval comes as the global stablecoin market has expanded to over $286 billion, primarily dominated by USD-pegged assets like USDT and USDC from Circle. While USD stablecoins already have a presence in Japan, JPYC will be the first stablecoin linked to the yen, creating competition and diversification for the market.
Potential Impact on the Bond Market
Mr. Okabe, representative of the JPYC issuing company, noted that the yen stablecoin could have a significant impact on the Japanese bond market. He pointed out that in the US, leading stablecoin issuers have become major buyers of US government bonds, holding them as collateral for circulating tokens.
He predicts a similar trend in Japan could boost demand for JGBs if JPYC gains widespread acceptance, and warns that "JPYC is likely to start purchasing Japanese government bonds in large quantities in the near future". He also emphasized that countries slow to develop stablecoins will face higher government bond interest rate risks due to missing out on new demand from these institutions.
Previously, Circle officially launched USDC in Japan on March 26 after being approved by the FSA for listing on SBI VC Trade. The approval on March 4 marked the first time the FSA allowed a foreign-issued stablecoin to be listed under the local regulatory framework.
Circle has announced plans to expand USDC listing to Binance Japan, bitbank, and bitFlyer – Japan's largest exchanges with daily trading volumes over 25 million USD and more than 1.85 million monthly visits.
