Japan’s Financial Services Agency (FSA) is gearing up to authorize the issuance of yen-backed stablecoins as soon as this autumn, representing the inaugural instance of the nation permitting a domestic fiat-pegged digital currency.
The Tokyo-based fintech company JPYC plans to register as a money transfer service within the month and will spearhead the launch, as reported by Japanese news source The Nihon Keizai Shimbun on Sunday.
JPYC is engineered to uphold a stable value of 1 JPY = 1 yen, supported by highly liquid holdings such as bank deposits and Japanese government bonds. Following purchase requests from individuals or organizations, the tokens are issued through bank transfer to digital wallets.
This approval occurs as the global stablecoin market, primarily influenced by dollar-pegged currencies like USDt (USDT) and Circle’s USDC (USDC), has surged over $286 billion. Although US dollar stablecoins have already established a presence in Japan, this will be the nation’s first yen-based offering.
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Yen stablecoins might transform Japan’s bond market
In a recent message on X, Okabe, a spokesperson for the JPYC issuing entity, mentioned that yen stablecoins could significantly influence Japan’s bond market. He observed that in the US, leading stablecoin issuers have emerged as substantial buyers of US Treasuries, using them as collateral for circulating tokens.
A parallel trend in Japan, he proposed, could heighten the demand for Japanese government bonds (JGBs) if JPYC achieves widespread utilization. “JPYC will likely commence purchasing Japanese government bonds in substantial quantities moving forward,” he stated.
Okabe also pointed out that nations lagging in stablecoin innovations risk experiencing increased government bond interest rates, as they forfeit a new category of institutional demand. He contended that monetary policy factors are presently encouraging governments, including Japan, to expedite the establishment of stablecoin regulations.
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Circle introduces USDC in Japan
As previously reported, Circle officially launched USDC in Japan on March 26, following approval from regulators for its listing on SBI VC Trade, a cryptocurrency exchange operating under a collaboration between SBI Holdings and Circle Japan KK.
This authorization, received on March 4, marked the first instance where the country’s Financial Services Agency approved a foreign-issued stablecoin in accordance with its regulatory guidelines.
At that time, Circle expressed intentions to enlarge USDC listings to Binance Japan, bitbank, and bitFlyer, two of which rank among Japan’s largest exchanges, each handling over $25 million in daily transactions and attracting more than 1.85 million monthly visits.
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