First yen-pegged stablecoin debuts in Japan on October 27

Japan will see the launch of its first yen-pegged stablecoin on October 27, marking a shift in a market where cash and credit cards remain dominant.

JPYC, a local startup, will issue stablecoins fully backed by domestic savings and Japanese government bonds.

Japan introduced rules in 2023 to permit stablecoin issuance, joining countries like South Korea that have taken similar steps.

Japan’s three major banks are also planning to issue stablecoins, according to local media.

Stablecoins tied to the US dollar currently account for over 99% of the global supply, the Bank for International Settlements said.

Bank of Japan deputy governor Ryozo Himino recently noted that stablecoins could partially replace bank deposits in the global payment system, and called for updated regulation.

Government data shows cashless payments in Japan rose to 42.8% in 2024, up from 13.2% in 2010.

JPYC said it will not charge transaction fees initially, aiming to increase adoption.

🔗 Source: Reuters

🧠 Food for thought

Implications, context, and why it matters.

Japan’s 2023 law sets rules for yen stablecoins

Since June 2023, only licensed banks, registered fund transfer service providers (non-bank payment institutions licensed to move funds), and trust companies (firms licensed to manage client assets) can issue stablecoins 1. JPYC secured the first funds transfer service provider license under the revised Payment Services Act (Japan’s law governing digital payments and e-money) 2.
Digital money-type stablecoins must be redeemable 1:1 for yen, with reserves set at 101% of the highest weekly outstanding amount 3. JPYC plans to hold bank deposits plus Japanese government bonds to keep the peg and support redemptions during price dips 3.

Payment firms can build rails with licensed intermediaries

Intermediaries must register with the Financial Services Agency 1. They must comply with AML/CFT and user protection rules 1. They must meet capital requirements and the travel rule (a requirement that sender plus recipient information accompany transfers) 1. Foreign firms can issue via the trust bank method (using a licensed trust bank to custody reserves and issue tokens) without a separate license in Japan if they avoid solicitation or intermediation there 1.
Payment providers and fintechs can partner with JPYC to set up merchant acceptance, as JPYC will not charge transaction fees at first 4. Mitsubishi UFJ Financial Group and Progmat are building multichain features (ability to operate across multiple blockchain networks) for NFT (non-fungible token) settlement 1. They also plan cross-chain lending 1. Clear rules open routes for cross-border rails (infrastructure for moving money between countries) 1.