Japan’s Financial Services Agency is preparing to approve the country’s first yen-pegged stablecoin, a move that could reshape demand for Japanese government bonds.
The FSA is expected to clear Tokyo-based fintech firm JPYC to issue a yen-denominated digital token as early as this fall, the Nihon Keizai Shimbun reported Sunday. JPYC will register as a money transfer business this month and lead the rollout.
The stablecoin will maintain a 1:1 value with the yen, backed by liquid assets such as bank deposits and Japanese government bonds. Users, individuals or corporations, will be able to apply for purchase and receive the tokens via bank transfer into digital wallets.
The approval comes as the global stablecoin market, worth over $286 billion, remains dominated by dollar-based tokens such as Tether’s USDT and Circle’s USDC. While both already circulate in Japan, JPYC will be the first stablecoin tied to the yen.
Issuers of dollar stablecoins have emerged as major buyers of U.S. Treasurys, holding them as collateral for tokens in circulation. JPYC’s backers say the same could happen in Japan. In a recent post on X, Okabe, a representative of the issuing company, said yen stablecoins could drive new demand for Japanese government bonds.
“JPYC will likely start buying up Japanese government bonds in large quantities going forward,” he wrote. He warned that countries slow to develop stablecoin frameworks may face higher government bond yields, missing out on this new source of demand.
Analysts note that the FSA’s move reflects growing recognition of stablecoins’ role in monetary policy and capital markets. If adoption is broad, JPYC could both strengthen yen-based digital transactions and create a new pipeline of institutional demand for JGBs.
