Japan’s JPYC Launches the World’s First Yen-Pegged Stablecoin To Boost Digital Payments

On October 27, Japanese startup JPYC introduced the first legally accepted stablecoin in the country, which is denominated in yen. The JPYC stablecoin is pegged to domestic deposits and Japanese government bonds (JGB) in full. The move has been hailed as one that can transform the digital payments in Japan.

Japan Gets the First Yen-Pegged Stablecoin

JPYC Inc. has announced the release of the first stablecoin pegged to the Japanese yen, JPYC. According to the press release, the company will begin to issue the JPYC stablecoin on Monday, October 27.

In addition, the JPYC stablecoin will maintain a 1:1 peg to the Japanese yen and will operate on Avalanche, Ethereum, and Polygon. The Tokyo-based fintech firm said that it will hold a 100% reserve held in yen deposits and government bonds for all the JPYC tokens it issues.

JPYC Debuts Stablecoin Issuance Platform

In addition to the stablecoin launch, JPYC launched the JPYC EX, a specialized platform to issue and redeem the stablecoin. JPYC EX was launched to remain in line with the Japanese Act on Prevention of Transfer of Criminal Proceeds. 

The platform puts an emphasis on identity verification (KYC) as well as transaction monitoring (AML) to comply with national laws. Users can buy the JPYC on the exchange after they complete identity verification via the My Number card, which is Japan’s identity document issued to citizens and residents.

Users are allowed to deposit their yen in the form of bank transfers, which can be deposited into their registered crypto wallets. From there, they can redeem the stablecoin for yen.

According to JPYC, the system will introduce stability, transparency, and efficiency to the ever-changing path of digital payment in Japan. JPYC has set a target issuance balance of 10 trillion yen (or around $67 billion) within three years and will create a new financial system based on stablecoins in the long term. 

Demand for Stablecoins in Japan Grows

JPYC’s stablecoin comes amidst growing demand for stablecoins in Japan and the whole of Asia. To meet the demand, Circle’s USDC launched in Japan earlier this year. The introduction of the first stablecoin that is backed by the yen may trigger the replacement of dollar-backed stablecoins in this area.

Noriyoshi Okabe, the president of JPYC, called the release of the stablecoin a significant step in the history of the Japanese currency. Noriyoshi said in a press conference that seven Japan-based companies have already shown interest in integrating the stablecoin into their operations.

The move by JPYC may soon see competition as other financial giants also seek to venture into the yen-stablecoin market. In August, Monex Group said it was creating its own stablecoin backed by the yen, and three major Japanese banks, MUFG, SMBC, and Mizuho Bank, are said to be creating a joint stablecoin via the Progmat platform of MUFG.

Such efforts indicate that there is a growing institutional focus on blockchain-based finance, particularly with the Financial Services Agency of Japan (FSA) indicating its plans to loosen its regulations on banks to permit direct investment in cryptocurrencies such as Bitcoin.

With the growing demand and push into the stablecoin market, Japan could emerge as a pioneer in controlled, fiat-backed digital currencies in Asia.