Japan set to approve first yen backed stablecoins this fall

August 17, 2025 — Japan’s Financial Services Agency (FSA) is preparing to give the green light to yen-backed stablecoins, with fintech firm JPYC expected to launch the country’s first domestic fiat-pegged digital asset this fall.

Key Takeaways JPYC will become the first yen-pegged stablecoin approved under Japan’s regulatory framework. Tokens will be backed by bank deposits and Japanese government bonds (JGBs). The move could reshape demand for JGBs, similar to how US stablecoin issuers buy Treasurys.

JPYC to lead yen stablecoin rollout

Tokyo-based JPYC is registering as a money transfer business this month, paving the way for issuance. Each JPYC token will be pegged 1:1 with the yen and backed by liquid reserves such as deposits and JGBs. Purchases will be made through bank transfers, with tokens delivered directly to digital wallets.

Global stablecoin market expansion

The global stablecoin sector has surged past $286 billion, led by USDT and USDC. While dollar-pegged tokens already circulate in Japan, this marks the first domestically issued yen stablecoin. Policymakers believe it could diversify liquidity options and strengthen Japan’s role in digital finance.

Impact on Japan’s bond market

Okabe, a representative of the JPYC issuer, noted that stablecoins in the US hold significant amounts of Treasurys. If replicated in Japan, JPYC adoption could increase demand for JGBs. He warned that countries without stablecoin frameworks risk higher bond yields as they miss out on this new institutional demand.

Circle’s USDC entry into Japan

Circle secured approval in March 2025 to list USDC on SBI VC Trade, marking the first time a foreign-issued stablecoin received FSA clearance. Circle plans to expand to Binance Japan, bitbank, and bitFlyer, aiming to strengthen its foothold in one of Asia’s most regulated crypto markets.