Japan greenlights first regulated yen-backed stablecoin

Japan's Financial Services Agency will for the first time permit the issuance of yen-denominated stablecoins. According to the Nikkei news service and Nihon Keizai Shimbun, fintech company JPYC Inc. has secured registration as a funds transfer service provider, becoming the first digital currency issuer in the country to receive such a licence. This approval paves the way for the launch of a regulated yen-backed stablecoin as early as October. JPYC aims to issue the equivalent of around seven billion US dollars over the next three years.

Following the registration, JPYC held a press conference in Tokyo where CEO Noritaka Okabe expressed enthusiasm, declaring:

We can deliver yen to billions of people, and ultimately we want to contribute to improving the value of the Japan yen.

The stablecoin, also called JPYC, is Ethereum-based and fully convertible into yen. Its value will remain fixed at one yen per unit, supported by highly liquid assets such as bank deposits and Japanese government bonds. Tokens will be issued to digital wallets following bank transfers from individuals or corporations.

Although an earlier version of JPYC has already been in circulation, the company will now integrate the token into Japan’s new stablecoin regulatory framework. Okabe explained that JPYC will not rely on transaction fees. Instead, revenue will be generated from interest earned on the government bonds underpinning the stablecoin.

Okabe also disclosed in a post on X that Circle, issuer of stablecoin USDC, has invested in JPYC. Okabe emphasised that the token is an "electronic payment method" intended for payments (e.g., cross-border transfers) rather than a speculative asset:

Now is the time to spread the word! JPYC is an electronic payment method, not a cryptocurrency. It is a currency-denominated asset whose value is pegged to fiat currency, combining the best of both digital cash and savings.

The development comes at a time when stablecoins remain a focal point of regulation worldwide, with markets such as the United States and Hong Kong introducing licensing and oversight regimes. The approval of JPYC as a regulated yen-backed stablecoin signals Japan's intention to take a more proactive role in shaping digital asset markets.

Written by Steven Pettigrove, Jordan Markezic and Emma Assaf