Leveraging the Yen’s Worldwide Liquidity, Japan Introduces JPYC to Propel On-Chain Foreign Exchange Markets

Japan has introduced its first stablecoin backed by the yen, known as JPYC, representing a major advancement in the country's efforts to incorporate digital assets into its financial system. Developed by the Tokyo-based fintech company JPYC Inc., the token maintains a 1:1 peg to the Japanese yen and can be fully redeemed, with its value supported by deposits in Japanese banks and government bonds. This sets it apart from similar initiatives in South Korea and Taiwan, where local currency usage is tightly regulated, according to

.

JPYC made its debut on October 27, 2025, alongside the launch of JPYC EX, a specialized platform for issuing and redeeming the stablecoin in compliance with Japan’s rigorous anti-money laundering laws, as detailed by

. After completing identity verification with Japan’s My Number card, users can exchange yen for JPYC through bank transfers. The company aims to reach a circulation of 10 trillion yen (approximately $65.4 billion) within three years, according to . President Noriyoshi Okabe described the stablecoin as a "historic breakthrough for Japanese currency," and the Cointelegraph report noted that seven companies are already interested in adopting JPYC for their services.

The yen-based stablecoin could play a key role in enabling USD/JPY trading pairs on decentralized exchanges, leveraging Japan’s position as a major player in the global foreign exchange market. The yen is currently the world’s third most traded currency, accounting for 16.85% of daily forex activity, as highlighted by CoinDesk. With both Japan and the U.S. now regulating stablecoins tied to their national currencies, the combination of USD and JPYC tokens could form a strong on-chain trading pair, potentially supporting crypto settlements across Asia, according to CoinDesk.

Japan’s clear regulatory framework gives it an edge over other Asian countries. While South Korea and Taiwan restrict the offshore use of their currencies, Japan’s capital control reforms since the 1980s have made the yen highly liquid internationally, which is crucial for stablecoin adoption. In contrast, although Hong Kong’s dollar is pegged to the U.S. dollar and freely traded offshore, it does not share the same onshore-offshore flexibility.

JPYC’s revenue model is unique as well. Instead of charging transaction fees, the company earns income from interest on its holdings of Japanese government bonds—a strategy made possible by the recent increase in bond yields above 3%, according to CoinDesk. This approach differs from dollar-backed stablecoins like

and , which dominate the $308 billion global stablecoin market but have faced regulatory challenges in certain regions, as Cointelegraph reported.

JPYC is part of a broader movement in Japan’s stablecoin sector. In August, Monex Group revealed plans for its own yen-pegged stablecoin, and three major banks—Mitsubishi UFJ Financial Group, Sumitomo Mitsui Banking Corp., and Mizuho—are working together on a joint initiative using the Progmat platform, according to

. JPYC’s vision to serve as a "new social infrastructure" through blockchain technology aligns with Japan’s wider fintech objectives, such as increasing the share of cashless payments, which now make up 42.8% of all transactions, as reported by .

Despite its promising position, JPYC still faces uncertainty regarding demand. Although the yen’s legal status and convertibility provide a solid base, international traders may question the necessity of another fiat-backed stablecoin besides the U.S. dollar. For example, euro-backed stablecoins have struggled to gain widespread use, even though the euro is a major global currency, as CoinDesk pointed out.