What Happened?
The Financial Services Agency (FSA) of Japan is expected to approve the issuance of the country’s first yen-pegged stablecoin “JPYC” by fintech company JPYC Inc. as early as this month (August 2025).
JPYC will maintain a fixed exchange rate of 1:1 with the Japanese yen, with its value fully backed by highly liquid assets such as bank deposits and Japanese government bonds. The entire operation will be strictly regulated under Japan’s Payment Services Act, ensuring the safety of user assets and preventing anti-money laundering risks, positioning it as a secure “electronic payment tool” rather than a high-risk crypto asset.
The launch of JPYC will provide a localized new option for the Japanese market, directly competing with the USD stablecoins currently circulating in Japan. In the long term, if yen stablecoins become widespread, the behavior of issuers purchasing Japanese government bonds as reserve assets may impact the bond market and accelerate the digital transformation of Japan’s overall payment system.
Japan’s First Stablecoin Set to Launch
The digitalization process of Japan’s financial system has reached an important milestone. According to a report by Nikkei, the Financial Services Agency (FSA) of Japan is expected to approve the first stablecoin pegged to the yen in August, with Tokyo fintech company JPYC Inc. leading the charge. This also signifies Japan’s formal embrace of digital assets linked to fiat currencies under a strict domestic regulatory framework.
Now is the time to spread the word! JPYC is an electronic payment method, not a crypto asset. It is a currency-linked asset whose value is tied to fiat currency, embodying the best aspects of digital cash and deposits. — Noritaka Okabe, CEO of JPYC (@noritaka_okabe) August 17, 2025
Background of Issuer JPYC and Stablecoin Mechanism
JPYC Inc. was established in 2019 and focuses on blockchain technology and digital assets. The company has been strategically positioned in the stablecoin space and raised approximately 500 million yen in Series A funding in 2021, with notable investors including Circle, the issuer of the USD stablecoin USDC.
However, the “JPYC” token was classified at that time as a prepaid tool rather than an electronic payment tool, meaning it was not legally considered a stablecoin. The main issue was that while fiat currency could be exchanged for JPYC, it was not allowed to be exchanged back into fiat currency, functioning more like a prepaid coupon with limited use and application.
The upcoming JPYC stablecoin will maintain a fixed exchange rate of 1:1 with the yen, meaning “1 yen = 1 JPYC”. The value behind the yen stablecoin is supported by highly liquid assets, including bank deposits and Japanese government bonds, to ensure price stability. Technically, JPYC will be issued as an ERC-20 token on the Ethereum blockchain, while also supporting multiple blockchains such as Polygon and Shiden.
Consumers or business users can apply to purchase JPYC through bank transfers, with equivalent JPYC tokens sent to their digital wallets. This operational model is similar to USD stablecoins, which currently have a global market capitalization exceeding $286 billion.
Regulatory Framework and Market Application Potential
Currently, Japan’s regulation of stablecoins focuses on three main points, with the core principle being “safety first, treating them as licensed electronic money.” Therefore, only Japanese financial institutions such as banks and licensed money transfer companies can issue yen stablecoins. This ensures that issuers are formal entities regulated by the government.
Additionally, for every stablecoin issued, an equivalent amount of yen deposits or secure government bonds must be held in banks to ensure the value of the stablecoin, allowing users to always exchange it back to real yen at a 1:1 ratio. Regarding cryptocurrency exchanges, if they wish to list such stablecoins, they must obtain special permission and strictly comply with anti-money laundering regulations to protect user safety.
The FSA views this approval as an important