Yen Stablecoin, Approved by the Financial Services Agency of Japan This Month

The Financial Services Agency (FSA) of Japan is expected to approve a yen-denominated stablecoin this month, according to a report by Nihon Keizai Shimbun on the 17th.

According to the Nikkei, the FSA will register the fintech firm JPYC as a fund transfer service provider this month. Through this, it will approve, for the first time, the issuance of a yen-pegged stablecoin whose value is linked to legal tender.

The stablecoin to be issued by JPYC will be named '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 the registration as a fund transfer operator, it plans to begin sales within a few weeks. Like cryptocurrencies, stablecoins are based on blockchain technology and are designed to match the value of fiat currencies such as the dollar or yen on a 1:1 basis.

JPYC aims to issue up to ¥1 trillion over the next three years. The Nikkei stated that "investors such as hedge funds and family offices managing the assets of wealthy individuals are showing strong interest," and "utilizing JPYC for carry trades aimed at profiting from interest rate differentials is also under discussion." Besides remittances for overseas students, JPYC can also be used for corporate payments or blockchain-based asset management services.

Japan, with its amended Payment Services Act enacted in June 2023, defined stablecoins as 'currency-denominated assets,' distinguishing them from cryptocurrencies, and allowed issuance by banks and trust companies.

Mansu Choi, Reporter bebop@hankyung.com