On Monday, Japan saw the launch of the world’s first stablecoin pegged to the yen, marking a noteworthy development in a nation where a considerable number of consumers continue to favor conventional payment methods such as cash and credit cards. A Japanese startup has commenced the issuance of stablecoins, known as JPYC, which are fully convertible to the yen and backed by domestic savings as well as Japanese government bonds. The company plans to issue 10 trillion yen ($66 billion) in JPYC over the next three years, with the goal of achieving widespread use of the digital assets internationally. The platform does not plan to impose transaction fees at the outset to promote its adoption, focusing instead on generating revenue from interest accrued on its holdings of JGBs.
“We aim to drive innovation by providing startups with access to reduced transaction and settlement fees,” Okabe stated. “Increasing global interoperability would benefit us too, so we’re open to capital tie-ups,” he stated. Blockchain-based stablecoins are typically pegged to a fiat currency and offer faster and cheaper transactions. With robust support from U.S. President Donald Trump, stablecoins tied to the U.S. dollar have experienced a significant rise, now representing over 99% of the global stablecoin supply, as reported by the Bank for International Settlements.
Global interest in stablecoins is on the rise, with Japan’s three megabanks set to collaborate on the issuance of stablecoins, according to a report. Tomoyuki Shimoda stated that yen stablecoins will not experience the same momentum as their U.S. dollar counterparts, which serve as the world’s reserve currency utilized globally. “There’s a lot of uncertainty on whether yen stablecoins will become widespread in Japan,” he stated. “If megabanks enter the market, the momentum could quicken. However, it may still require a minimum of two to three years.”
Policymakers are raising alarms about the potential of stablecoins to enable the transfer of funds beyond the reach of regulated banking systems, which could jeopardize the position of commercial banks in the landscape of global payment flows. “Stablecoins might emerge as a key player in the global payment system, partially replacing the role of bank deposits,” Ryozo Himino stated.