Japan to approve first yen-denominated stablecoin JPYC

According to Jinshi, Nikkei reported that Japan's Financial Services Agency (FSA) will approve the issuance of the country's first yen-denominated stablecoin, JPYC, this month. The FSA will register fintech company JPYC Inc. as a remittance company and expects sales to begin within weeks of registration.

The digital currency will be backed by liquid assets such as government bonds to maintain its value at a constant 1:1 ratio. The FSA will approve the issuance of the first yen-denominated stablecoin pegged to a fiat currency in Japan as early as this fall. Japanese fintech company JPYC (Chiyoda Ward, Tokyo) will be registered as a money transfer company this month.

Globally, the market for dollar-denominated stablecoins has grown to over $250 billion (approximately 37 trillion yen). Japan also aims to promote them as a means of international remittances, among other options. Like cryptocurrencies, stablecoins are based on blockchain (distributed ledger) technology and are designed to be pegged 1:1 to fiat currencies such as the US dollar.

The revised version of Japan's Funds Settlement Act, which will take effect in June 2023, defines stablecoins as "currency-denominated assets," distinguishing them from virtual currencies and allowing their issuance by banks, trust companies, and money transfer companies.

The stablecoin issued by JPYC is called "JPYC." To ensure that the value of one JPYC is equal to one yen, the company will hold highly liquid assets such as deposits and government bonds as backing. Sales will begin within a few weeks of registering as a money transfer company.

Individual, corporate, and institutional investors interested in using JPYC can apply to purchase JPYC and make a payment. The JPYC will then be transferred to their digital wallet. In addition to international transfers, such as sending remittances to international students, JPYC can also be used for corporate payments and blockchain-based asset management services known as decentralized finance (DeFi).

The goal is to issue 1 trillion yen in JPYC over the next three years. Numerous institutions, including hedge funds investing in virtual currencies and family offices managing the assets of wealthy individuals, have expressed interest in this initiative. These institutions are said to be considering using JPYC in "carry trades" aimed at profiting from interest rate differentials.