The Financial Services Agency (FSA) of Japan is expected to approve the nation’s first yen-pegged stablecoin as early as this fall. The stablecoin, called JPYC, will be issued by Tokyo-based fintech company JPYC Inc. and will be backed by bank deposits and Japanese government bonds (JGBs) to ensure a stable 1:1 peg with the Japanese yen.
While JPYC Inc. first launched JPYC in 2021, the token was then classified as a “prepaid payment instrument.” At the time, it could only be used for top-ups and could not be converted back to yen, which meant it did not qualify as a true stablecoin under Japan’s revised Payment Services Act.
According to a recent report by Nikkei, JPYC Inc. will soon register as a “funds transfer service provider.” After receiving FSA approval, it will issue the compliant version of JPYC. Individuals and businesses will be able to purchase JPYC via bank transfers and store them in a digital wallet. The reserve mechanism is similar to that of major dollar stablecoins like USDT and USDC, which also hold government bonds as part of their reserves.
Japan officially revised its Payment Services Act (PSA) in May 2025, bringing stablecoins under regulation for the first time. The law restricts stablecoin issuance to banks, trust companies, and funds transfer service providers. It also includes measures to protect customer assets, requiring exchanges to keep them onshore in Japan, a lesson learned from the 2022 FTX Japan incident.
Noritaka Okabe, a representative for JPYC Inc., stated on X (formerly Twitter) on August 14 that stablecoins could significantly impact the Japanese government bond market. He cited that major US stablecoin issuers have become significant buyers of US Treasury bonds, as they need to hold them as collateral. Okabe cautioned that countries failing to keep up with stablecoin development may miss out on this new class of bond buyers, potentially leading to higher government bond yields. This, he noted, is one reason why many governments are expediting the creation of stablecoin regulatory frameworks.
