The Financial Services Agency (FSA) of Japan is preparing to approve the issuance of yen-denominated stablecoins as early as this fall, marking the country's first allowance for the issuance of digital currencies pegged to the domestic fiat currency.
According to a report by the Japanese news outlet Nikkei, Tokyo-based fintech company JPYC will register as a remittance business within this month and will lead the launch.
JPYC aims to maintain a fixed value of 1 JPY = 1 yen, supported by highly liquid assets such as bank deposits and Japanese government bonds. After individuals or businesses submit purchase requests, the tokens are issued to digital wallets via bank transfers.
This approval comes as the global stablecoin market expands to over $286 billion, primarily dominated by dollar-pegged assets like USDt and Circle's USDC. While dollar stablecoins have already established a foothold in Japan, this will be the country's first yen-based product.
Okabe, a representative of the JPYC issuing company, stated in a recent post on the X platform that the yen stablecoin could have a significant impact on the Japanese bond market. He noted that in the United States, leading stablecoin issuers have become major buyers of U.S. Treasury bonds, holding them as collateral for circulating tokens.
He believes that if JPYC gains widespread adoption, a similar trend could emerge in Japan, driving demand for Japanese government bonds (JGB). "JPYC may start purchasing Japanese government bonds in large quantities in the future," he wrote.
Okabe also pointed out that countries lagging in stablecoin development face the risk of rising government bond rates as they miss out on a new category of institutional demand. He believes that monetary policy considerations are now prompting governments, including Japan, to accelerate the construction of stablecoin frameworks.
Reports indicate that Circle officially launched USDC in Japan on March 26, after receiving regulatory approval to list on SBI VC Trade, an exchange jointly operated by SBI Holdings and Circle Japan KK.
The approval obtained on March 4 marked the first time the country's FSA approved a foreign-issued stablecoin under its regulatory framework.
At that time, Circle stated its plans to expand USDC to Binance Japan, bitbank, and bitFlyer, two of which rank among Japan's largest exchanges, each with a daily trading volume exceeding $25 million and monthly visits exceeding 1.85 million.
Related: New regulations from the Bank for International Settlements (BIS) may make it harder to cash out "dirty money" in cryptocurrencies.
Original article: “Japan to Approve First Yen-Supported Stablecoin JPYC This Fall”
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