Japan's first local stablecoin issuer has stated that digital asset companies may soon become significant participants in the country's government bond market and could potentially reshape the monetary policy landscape.
Headquartered in Tokyo, JPYC is the company behind Japan's first stablecoin pegged to the yen. JPYC claims that as the reserve scale expands, the issuer may evolve into a major buyer of Japanese government bonds (JGB).
According to Reuters, JPYC founder and CEO Noritaka Okabe stated that as the Bank of Japan (BOJ) slows its bond purchases, stablecoin reserves are expected to fill the gap left behind.
This Tokyo-based startup began issuing its yen-pegged tokens, also known as JPYC, on October 27 under the country's revised Payment Services Act, which provides the legal framework for the country's first stablecoin. So far, the company has issued approximately $930,000 worth of tokens and plans to reach a circulation of $66 billion within the next three years.
The token is backed by a combination of bank deposits and Japanese government bonds and can be fully redeemed for yen. It is also designed to move seamlessly on blockchain rails.
Noritaka Okabe stated that JPYC plans to invest 80% of the issuance proceeds in Japanese government bonds, with the remaining 20% deposited in bank savings accounts, initially focusing on short-term securities. He added that as demand grows and yields remain attractive, the company will also consider long-term Japanese government bonds in the future.
This allocation strategy could position stablecoin issuers as significant players in the Japanese government bond market. Currently, the Bank of Japan still holds about half of the total Japanese government bonds, amounting to as much as $70 trillion. As the central bank gradually reduces its bond purchases, the market urgently needs new buyers to absorb the additional supply.
In this regard, Noritaka Okabe pointed out that stablecoin reserves can naturally fill part of the void, linking blockchain applications with fiscal financing.
He noted, "The amount of Japanese government bonds purchased by stablecoin issuers will depend on the balance of supply and demand for stablecoins. This trend will occur globally, and Japan will not be an exception."
Okabe's comments come as stablecoins continue to be adopted in Japan's traditional financial sector.
On Friday, the Financial Services Agency (FSA), the national financial regulatory body, supported a yen-pegged stablecoin project led by Japan's largest financial institutions.
The FSA announced the launch of a "Payment Innovation Project," with participants including Mizuho Bank, Mitsubishi UFJ Bank, Sumitomo Mitsui Banking Corporation, Mitsubishi Corporation and its financial subsidiaries, as well as MUFG's Progmat stablecoin issuance platform.
Regulators stated that these companies will officially launch stablecoin issuance for payment scenarios within this month.
Related: Dan Tapiero claims the Bitcoin (BTC) bull market is still ongoing, but a 70% pullback may be on the horizon.
Original article: “Japanese Stablecoin Issuer Expected to Fill Bank of Japan Bond Buying Gap”
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