Deposit and government bond collateralization
First case following revision of the Payment Services Act
Issuance target of $6.7 billion within three years

The Japanese government is set to approve the issuance of yen-denominated stablecoins for the first time. In the 2023 revision of the Payment Services Act, Japan defined stablecoins as “currency-denominated assets,” separating them from other cryptocurrencies and allowing issuance by banks, trust companies, and money transfer operators. The upcoming issuance by JPYC marks the first case based on this legal framework, as Tokyo moves to respond to the global trend—led by the United States—of expanding stablecoin adoption.

JPYC steps in as the first issuer

According to a report by the Nikkei on the 18th, the Financial Services Agency (FSA) plans to authorize Tokyo-based fintech firm JPYC to launch a yen-denominated stablecoin. A stablecoin is a digital asset pegged to legal tender or physical assets such as gold to minimize price volatility. It maintains value stability by backing issuance with deposits of real assets like dollars or euros, or through algorithmic mechanisms. Unlike Bitcoin or Ethereum, whose prices fluctuate sharply, stablecoins are widely used in practical financial transactions such as remittances and payments.

The FSA intends to register JPYC as a licensed stablecoin issuer as early as this month. Following registration, JPYC will issue and distribute a stablecoin under the name “JPYC.” Each unit, “1JPYC,” will be designed to maintain a stable value equivalent to one yen. To secure this parity, JPYC will hold assets such as yen deposits or Japanese government bonds to underpin the value of the issued stablecoins.

The method of asset custody will be operated transparently under the FSA’s oversight. JPYC aims to issue up to $67 billion over the next three years, targeting underserved users while supplementing the efficiency of existing financial infrastructure. The Nikkei reported that “JPYC can be used not only for international remittances such as payments for overseas students, but also for corporate settlements and decentralized finance (DeFi) on blockchain,” adding that “hedge funds investing in digital assets and family offices managing high-net-worth portfolios are already showing interest.” There is also speculation that JPYC could be deployed in carry trade strategies capitalizing on interest rate differentials.

Prospects for a ‘yen stablecoin ecosystem’

This development represents the first instance of stablecoin issuance being formally authorized in Japan since the regulatory framework was established, potentially pulling the country’s market—previously lagging behind overseas stablecoins—into the regulated financial sphere. The move could foster a “yen stablecoin ecosystem,” enabling lower international remittance costs, streamlined corporate settlements, and broader blockchain-based asset management.

Stablecoins are built on blockchain technology but differ from conventional cryptocurrencies in that they are pegged one-to-one to legal tender such as the dollar or yen. Globally, dollar-denominated stablecoins dominate the market, with Tether (USDT) and USD Coin (USDC) leading and pushing the overall market beyond $250 billion. Citigroup projects the market could expand more than tenfold to as much as $3.7 trillion by 2030.

According to the FSA, several other fintech firms are also exploring issuance of yen-based stablecoins. Companies holding money transfer licenses are reportedly preparing similar initiatives, suggesting more cases could follow.

Acceleration of regulated blockchain-based financial infrastructure

Even Japan’s traditionally conservative banking sector is moving, with major lenders pursuing yen stablecoin commercialization within the year. The three megabanks—Mizuho, Sumitomo Mitsui (SMBC), and Mitsubishi UFJ Financial Group (MUFG)—are spearheading “Project Pax,” a stablecoin-based cross-border payments platform. Their aim is to leverage existing remittance infrastructure to enable settlement via stablecoins.

Japan is also preparing Progmat Coin, a stablecoin issuance platform compliant with domestic regulations. Crypto outlet The Cryptonomist noted that “Mitsubishi UFJ is preparing the country’s first stablecoin issuance,” calling it “a historically significant juncture.” Separately, SMBC is working with the Avalanche blockchain on a stablecoin initiative, planning to conduct experiments with IT firm TIS later this year and move toward issuance in 2026.

In March, Circle, the issuer of dollar-backed USDC, partnered with Japanese financial group SBI to list USDC on SBI VC Trade, a digital asset exchange. The move marked one of the first large-scale responses from Japanese finance to the stablecoin trend, likely influencing other institutions’ strategies. According to an SBI document cited by XRP analyst JackTheRippler, the yen stablecoin will leverage XRP Ledger’s real-time settlement, low fees, and built-in decentralized exchange features. By issuing yen-based tokens on XRPL, SBI intends to provide a digital representation of the yen that can be seamlessly used in domestic and international transactions.