Japan to Approve Yen Stablecoin This Month…To Be Issued This Fall

Financial Services Agency Grants First JPYC Approval

On the 17th, Nikkei Inc. reported in a breaking news article that Japan’s Financial Services Agency is set to approve a yen-denominated stablecoin within this month.

According to Nikkei, the Financial Services Agency plans to register fintech company JPYC as a funds transfer business this month. Through this, it will grant the first approval for the issuance of a yen-denominated stablecoin that is pegged to legal tender.

The stablecoin to be issued by JPYC will be called 'JPYC.' To maintain the value of 1 JPYC = 1 yen, highly liquid assets such as deposits or government bonds will be held as collateral. After completing registration as a funds transfer operator, sales are scheduled to begin within a few weeks.

JPYC aims to issue a total of ¥1 trillion over the next three years. Nikkei noted that investors such as hedge funds and family offices that manage wealthy clients’ assets are showing strong interest, and using JPYC for carry trades aimed at interest rate differentials is also being discussed. JPYC can also be used not only for overseas student remittances but also for corporate payments and asset management services based on blockchain technology.

Like cryptocurrencies, stablecoins are based on blockchain technology and are designed to remain pegged one-to-one to legal tender such as the dollar or yen. Under the revised Payment Services Act, enacted in June 2023, Japan defined stablecoins as 'currency-denominated assets,' distinguishing them from virtual currencies, and allowed them to be issued by banks, trust companies, and funds transfer businesses.

Reporter Mansoo Choi bebop@hankyung.com