Japan to Approve First Yen Backed Stablecoin

Japan is preparing to take a major step in its digital asset regulation by approving the country’s first yen-backed stablecoin. 

According to reports from Nikkei, the Financial Services Agency (FSA) is expected to give Tokyo-based fintech firm JPYC the green light as early as this fall. 

This move could reshape how both domestic and international markets view yen-denominated digital currencies, potentially positioning Japan as a leader in regulated stablecoin adoption.

Key Takeaways

• Japan’s FSA is expected to approve fintech firm JPYC to issue the nation’s first yen-backed stablecoin.
• JPYC plans to issue 1 trillion yen ($6.78 billion) worth of stablecoins across three years.
• The stablecoin will be backed by liquid assets like deposits and Japanese government bonds.
• Potential use cases include international remittances, corporate payments, and DeFi.
• Japan’s regulatory framework recognizes fiat-pegged stablecoins as electronic payment instruments.

JPYC’s Stablecoin Approval

The approval process for JPYC’s yen-backed stablecoin highlights how Japan is advancing regulatory clarity in the stablecoin sector. 

JPYC plans to register as a money transfer business with the FSA this August, after which it expects to initiate token sales. The backing will come from highly liquid assets such as bank deposits and government bonds to ensure a secure 1:1 peg to the Japanese yen.

JPYC’s issuance target is ambitious. The company aims to distribute 1 trillion yen worth of tokens, equivalent to $6.78 billion, over the next three years. 

Hedge funds and institutional players have already expressed interest in participating, signaling confidence in the demand for a regulated yen-denominated digital asset.

Read Also: New Bitcoin Regulation in Japan

Regulatory Landscape in Japan

Japan’s path to approving stablecoins began in June 2022, when the Japanese parliament passed amendments to the Payment Services Act. 

These amendments recognized fiat-backed stablecoins as “Electronic Payment Instruments” and stipulated that only licensed banks, trust companies, and registered providers could issue them.

By 2023, Japan had formally categorized stablecoins as “currency-denominated assets.” This regulatory clarity encouraged traditional financial institutions and fintech firms to explore stablecoin issuance, creating an environment where innovation could coexist with compliance.

Read Also: Japan Embraces Crypto in Corporate Culture

Competing Stablecoin Projects

JPYC is not the only player eyeing the Japanese stablecoin market. Sumitomo Mitsui Financial Group (SMBC), the country’s second-largest bank, has also announced plans to launch its own stablecoin. 

Collaborating with Ava Labs and Fireblocks, SMBC’s project reflects how established financial groups are positioning themselves in the growing digital asset sector.

With competition heating up, JPYC’s early-mover advantage could give it a strong foothold. However, larger financial institutions may leverage their existing networks and credibility to scale adoption faster.

Final Thoughts

Japan’s upcoming approval of a yen-backed stablecoin represents more than a milestone in regulation. 

It signals a shift in the global digital currency landscape, where stablecoins tied to major fiat currencies will increasingly play a role in payments, cross-border transactions, and decentralized finance. 

If successful, JPYC’s stablecoin could pave the way for more institutional adoption and make yen-denominated assets more relevant in the global crypto ecosystem.

Read Also: Japan's Crypto Reform: Flat Tax, ETFs

FAQ

What is Japan’s first stablecoin?

The first yen-backed stablecoin set for approval is JPYC, issued by a Tokyo-based fintech firm.

How much will JPYC issue?

JPYC plans to issue 1 trillion yen ($6.78 billion) worth of stablecoins over three years.

What backs the yen stablecoin?

The JPYC stablecoin will be backed by deposits and Japanese government bonds to maintain its peg.

How will the stablecoin be used?

JPYC’s stablecoin is designed for remittances, corporate payments, and integration into DeFi platforms.

Who else is working on Japanese stablecoins?

Sumitomo Mitsui Financial Group (SMBC), Japan’s second-largest bank, is developing its own stablecoin in partnership with Ava Labs and Fireblocks.