The Japanese Financial Services Agency will approve the first yen-based stablecoin. This approval allows fintech company JPYC Inc. to issue its digital token. The company plans to launch the stablecoin by the end of this year.
According to a Nikkei report published on 08/18/2023, the regulatory body intends to register JPYC as a money transfer service provider this month, with token distribution to begin shortly after. This initiative marks a milestone in Japan's efforts to modernize its financial system, introducing a stablecoin designed to operate as a digital representative of the yen while complying with strict domestic regulations.
An Alternative to Digital Yen in Payment Landscape
Stablecoin issuer JPYC Inc., founded in 2019, is a fintech company based in Tokyo, Japan. The company specializes in blockchain technology and digital assets, focusing on yen-pegged stablecoins.
In 2021, Circle, the issuer of USDC stablecoin, invested in JPYC through Circle Ventures. JPYC raised approximately 500 million yen in its Series A funding round. JPYC's yen-pegged stablecoin operates as a prepaid payment tool, allowing 1:1 accounting processing with the yen.
In response to BeInCrypto's comment request, JPYC's CEO, Norikata Okabe, posted on X confirming the investment, including from Circle.
"JPYC receives direct or CVC investments from listed companies like Circle, Asteria, Densan System, Persol, Aiful, and others. Additionally, there are listed companies that have invested in JPYC on a non-disclosed basis. Moreover, we have entrusted Simplex to develop our trading system."
The stablecoin, branded as JPYC, is available as an ERC-20 token on Ethereum and other blockchains like Polygon and Shiden. The stablecoin maintains equivalence with the Japanese yen. JPYC supports its issuance with bank deposits and government bonds. These liquidation assets provide measures to ensure price stability.
In practice, consumers can register tokens by transferring money, after which an equivalent amount of JPYC will be credited to their digital wallet. This structure reflects frameworks common in dollar-pegged stablecoins, which have developed into a global market worth over $285 billion.
Regulatory Oversight and Market Integrity
The FSA views this approval as more than a legal procedure. The stablecoin aims to promote a safe domestic ecosystem. It can support cashless transactions and international money transfers. The system also enables business payments.
A yen-pegged stablecoin provides individuals with a new digital payment method. Companies can reduce foreign exchange costs in cross-border trade. The stablecoin offers opportunities for both groups.
Despite its potential, stablecoins continue to raise concerns about money laundering, illegal transfers, and systemic risks. The FSA has emphasized that JPYC's operations will fall within the framework of Japan's Payment Services Act, with enhanced monitoring and compliance obligations.
JPYC Inc. has committed to prioritizing regulatory compliance. In July, Okabe spoke at the IVC 2025 Summit. He stated that JPYC is preparing a "new version". This update reflects evolving regulatory and market requirements.
Competitive Pressure and Strategic Prospects
The Japanese market has been exposed to US dollar-backed stablecoins, notably through SBI VC Trade processing USDC. However, JPYC's approval as the first yen-based token introduces a new aspect to the market. Its success will depend on whether it can achieve widespread acceptance in a field dominated by dollar-linked instruments.
Looking ahead, the yen stablecoin may intersect with broader financial innovations. Potential applications range from e-commerce platforms to digital securities markets. The stablecoin can easily integrate with these systems. It may also connect with a potential central bank digital currency. If yen-pegged tokens attract interest, they could drive the digitization of Japan's payment infrastructure, reshaping consumer and corporate financial behavior.
