Japan’s First Yen-Pegged Stablecoin Approved, JPYC to Launch Token Backed by Govt Bonds

Japanese fintech startup JPYC said on Friday it has obtained a licence to issue the country’s first yen-pegged stablecoin, also named JPYC, and plans to begin issuance in autumn 2025, Reuters reported.

The token will be fully convertible to the yen and backed by domestic savings and Japanese government bonds (JGBs), the company’s chief executive Noritaka Okabe told reporters.

JPYC expects initial demand from institutional clients, hedge funds, family offices and other professional investors in Japan, before pursuing wider domestic and eventual international use as a form of “digital yen.” The startup said it will not charge transaction fees; instead, issuance will grow in step with its JGB holdings, and revenue will come from interest earned on those bonds.

Backing Model

Unlike many crypto stablecoins that rely on cash or commercial paper, JPYC’s reserves will be heavily weighted towards sovereign debt.

JPYC says it will add more JGBs as more coins are minted, a design intended to strengthen the peg by tying supply to liquid, low-risk government assets. The company frames the approach as institutional-grade, prioritising stability and regulatory alignment.

JPYC’s move comes amid a wave of regulatory activity worldwide. The United States has recently clarified federal rules for stablecoins to promote payments use, while other major markets remain cautious or restrictive.

JPYC aims to position Japan as a trusted issuer by anchoring its token to the deep JGB market, which could appeal to overseas users seeking a yen-denominated digital asset.

Risks & Questions Ahead

If successful, JPYC would represent a major step for Japan into regulated digital-asset payments and could help internationalise a digital form of the yen.

Its JGB-backed model may also serve as a reference for other issuers seeking strong on-chain collateral and closer ties to regulated finance. For institutions, a yen stablecoin could simplify cross-border transactions, hedging and settlement workflows.

Key issues remain: redemption mechanics under stress, liquidity management, regulatory oversight of on-chain reserves, and how JPYC will interact with any future central bank digital currency (CBDC) or payments rules.

Tying issuance to JGB purchases raises operational and market-risk questions, for example, how quickly JPYC can convert bonds to cash to meet large redemptions without disrupting yields. JPYC says these are being addressed as it prepares for launch.

JPYC plans to begin issuance in autumn 2025 and will target institutional distribution initially. Observers will watch licensing details, custody arrangements for the bond reserves, audit and transparency mechanisms, and whether JPYC seeks broader retail access or international partnerships once operational.