Japan’s First Yen-Backed Stablecoin Approved as JPYC Takes Charge

• Japan’s Financial Services Agency has cleared JPYC Inc.'s yen-backed stablecoin launch.
• The token will be tied 1:1 to the yen, backed by reserves in bank deposits and government bonds.

On August 17, 2025, Cointelegraph, citing The Nihon Keizai Shimbun, reported that Japan's Financial Services Agency (FSA) is set to greenlight the initial issuance of a yen-backed stablecoin by JPYC Inc. this fall. This landmark approval marks a pivotal moment in Japan's bid to align its financial systems with global digital currency trends and strengthen its foothold in the expanding $250 billion stablecoin sector. The move is expected to streamline international remittances and enhance Japan's positioning in cross-border financial operations.

The JPYC stablecoin, pegged at a fixed one-to-one ratio with the Japanese yen, will be underpinned by reserves composed of bank deposits and Japanese government bonds. Users can acquire JPYC tokens by transferring funds via bank deposits, which will then be converted into stablecoin units within their respective digital wallets. Utilizing public blockchain networks, the stablecoin aims to provide enhanced transparency and security in transactions.

Japan’s regulatory framework for stablecoin issuers mandates robust safeguards to minimize risks such as depegging. JPYC Inc. will maintain a reserve equivalent to 101% of the highest issuance volume within the launch's first week, ensuring liquidity protection. Moreover, the issuer bears liability in cases where depegging stems from depreciation in the value of the bonds backing the stablecoin.

JPYC Inc. will retain any interest accrued from the government bonds held as collateral. While stablecoin holders will not benefit from these earnings, the issuer may introduce perks akin to credit card rewards to encourage user adoption and enhance the product’s appeal.

Financial analysts suggest that the introduction of yen-backed stablecoins could influence the domestic bond market. With stablecoin issuers now serving as significant buyers of U.S. Treasuries, a similar development might unfold in the market for Japanese government bonds. This shift could affect yields and liquidity, although the broader implications remain speculative.

Despite the stringent regulations in place, the JPYC stablecoin is not entirely risk-free. Any reduction in the value or liquidity of the reserve assets could result in the token trading below its 1-yen peg on secondary exchanges. However, the built-in mechanism enabling direct redemption of JPYC tokens with the issuer at their face value is designed to counteract such pressures. Extreme scenarios, such as a government default, could still pose longer-term challenges to maintaining the peg.

As of August 17, 2025, 17:09 UTC, USDC (USDC), a leading stablecoin, remains steady at $1 with minimal fluctuations, reflecting the stability inherent in fully backed cryptocurrencies. JPYC aims to replicate such performance within the yen-backed stablecoin space, establishing a secure and regulated option for users navigating the digital currency landscape.