JPYC: Japan Launches World’s First Fully Yen-Pegged Stablecoin

Japan has launched world’s first fully yen-pegged stablecoin, marking a landmark step in the integration of blockchain technology into the mainstream financial system. The stablecoin, named JPYC, is issued by a Japanese fintech startup “JPYC Inc.”, and is fully backed by Japanese yen deposits and Japanese Government Bonds (JGBs).

About JPYC Stablecoin

  • Issuer: JPYC Inc., a Japanese startup.
  • Peg: 1 JPYC = ¥1 (Japanese yen).
  • Backing: 100% collateralized by bank deposits and Japanese Government Bonds (JGBs).
  • Technology Base: Blockchain-based digital asset (built on the same distributed ledger technology as cryptocurrencies).
  • Convertibility: Fully convertible to yen.
  • Launch Significance: The world’s first legally compliant, fully yen-backed stablecoin under Japan’s 2023 digital asset laws.

Purpose and Vision

  • To provide a fast, low-cost, and secure digital payment alternative to traditional systems.
  • To promote cashless transactions in a traditionally cash-dominant economy.
  • To eventually make JPYC a global payment instrument, supporting cross-border settlements.

Issuance & Market Ambition

  • JPYC plans to issue up to 10 trillion yen (≈ USD 66 billion) worth of stablecoins in three years.
  • Initial strategy:
    • No transaction fees to encourage usage.
    • Revenue generation through interest from JGB holdings.
  • Target audience: Domestic consumers, overseas users, and digital payment service providers.

Features of JPYC

FeatureDescription
Peg TypeFully pegged to Japanese Yen (¥1 = 1 JPYC)
CollateralBank deposits + Japanese Government Bonds
Blockchain TypePublic blockchain (decentralized ledger)
Transaction SpeedNear-instant (under 1 second)
Cost EfficiencyTransfers for less than 1 yen
TransparencyRegulated under Japan’s 2023 stablecoin framework
Revenue ModelEarnings from JGB interest, not transaction fees

Global and Domestic Context

Stablecoin Landscape
  • Global issuance volume (2025): $280 billion (up from $200B at the start of the year and $28B in 2020).
  • Market dominance: USD-backed stablecoins account for 99% of global supply (as per BIS).
  • New players:
    • U.S.: GENIUS Act (2025) — a national framework for stablecoins.
    • China: Exploring yuan-backed stablecoins.
    • South Korea: Planning to issue won-based stablecoins.
Japan’s Policy Shift
  • Japan amended its Payment Services Act (2023) to allow issuance of regulated stablecoins.
  • The Financial Services Agency (FSA) oversees the compliance of stablecoin issuers.
  • Japan’s three megabanks– Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho — are collaborating to issue their own stablecoins, potentially mainstreaming digital yen.

Background: Why This Launch Matters

  • Japan has long been a cash-reliant society, but cashless payments have risen to 42.8% in 2024 (from 13.2% in 2010).
  • The JPYC launch represents a pivotal step in Japan’s digital currency transformation.
  • It also signals Asia’s growing participation in regulated stablecoin ecosystems, previously dominated by U.S. dollar assets.

Benefits of JPYC Stablecoin

  • Faster Transactions: Instant peer-to-peer transfers globally without intermediaries.
  • Lower Cost: Transaction fees as low as < ¥1 per transfer.
  • Secure & Transparent: 100% collateralized with traditional assets.
  • Boosts Financial Inclusion: Provides a digital payment option for individuals and SMEs.
  • Cross-Border Potential: Can streamline international remittances and trade settlements.

Challenges and Regulatory Concerns

  • Regulatory oversight: Ensuring transparency and audit of collateralized assets.
  • Financial system risks: Potential to move funds outside regulated banking channels.
  • Banking impact: Could weaken the role of commercial banks in payment flows if adoption grows rapidly.
  • Market adoption: While promising, mass usage in Japan may take 3+ years due to cultural reliance on cash.

Global Context: Stablecoin Developments

CountryKey DevelopmentNote
United StatesGENIUS Act (2025) to regulate and promote stablecoinsSupported by President Donald Trump
ChinaConsidering digital yuan stablecoinsTo complement CBDC (e-CNY)
South KoreaPlans for won-backed stablecoinsSimilar to Japan’s approach
JapanLaunched JPYCFirst fully yen-backed stablecoin

Japanese Yen (¥)

  • Currency code: JPY
  • Issued by: Bank of Japan (BOJ)
  • Introduced: 1871 under the New Currency Act
  • Symbol: ¥
  • Denominations: Coins (¥1–¥500), Notes (¥1,000–¥10,000)

Japanese Government Bonds (JGBs)

  • Issuer: Ministry of Finance, Japan
  • Type: Debt securities issued to finance public spending.
  • Tenures: Short-term (T-Bills), Medium-term, and Long-term bonds.
  • Investors: Domestic institutions and citizens (majorly held within Japan).
  • Significance: Considered one of the safest sovereign bonds globally.

Stablecoin Basics

  • Definition: A blockchain-based digital asset pegged to a stable asset (currency, commodity, or bond).
  • Types:
    • Fiat-backed: Supported by currency reserves (e.g., JPYC, USDC, Tether).
    • Crypto-backed: Collateralized by other cryptocurrencies (e.g., DAI).
    • Algorithmic: Value maintained via algorithmic supply-demand adjustments.
  • Purpose: To reduce volatility compared to traditional cryptocurrencies like Bitcoin or Ethereum.

Japan’s Three Megabanks

  1. Mitsubishi UFJ Financial Group (MUFG)
  2. Sumitomo Mitsui Financial Group (SMFG)
  3. Mizuho Financial Group (MFG)

These banks play a key role in promoting digital yen initiatives and stablecoin development in Japan.

Significance

  • The launch of JPYC stablecoin marks Japan’s official entry into the regulated digital currency space, creating a model for safe, asset-backed stablecoins.
  • It combines financial stability (via JGB backing) with technological innovation (via blockchain).
  • The move strengthens Japan’s ambition to lead Asia in digital finance innovation and to build a parallel payments infrastructure for the global economy.

Connect with our Social Channels

Share With Friends

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top