TLDR
Japan is preparing to launch its first yen-backed stablecoin this fall through fintech firm JPYC, with regulatory approval expected from the Financial Services Agency
Monex Group is also considering launching its own yen stablecoin for international remittances and corporate settlements
The Bank of Japan is expected to raise interest rates in October or December, which could boost demand for yen-backed assets
Japanese government bond yields have reached multi-decade highs, with the 30-year yield hitting a record 3.2%
Bitcoin priced in yen has dropped 8% this month as the yen strengthens against other currencies
Japan is set to introduce its first blockchain-based yen stablecoin this fall. The timing comes as the Bank of Japan prepares for expected interest rate increases that could boost demand for yen-backed digital assets.
Tokyo-based fintech firm JPYC plans to register as a money transfer business within the month. The company will lead the rollout of a JPY-pegged stablecoin that trades at a 1:1 ratio with the Japanese yen.
Japan’s Financial Services Agency is likely to approve the country’s first yen-denominated stablecoin as early as this fall. The stablecoin will be backed one-to-one by bank deposits and government bonds.
JPYC faces competition from established financial institutions. Tokyo-based Monex Group announced it is considering launching its own JPY stablecoin for international remittances and corporate settlements.
Oki Matsumoto, Chairman of Monex Group, told local media that issuing stablecoins requires infrastructure and capital. He said the company will “respond properly” to the market opportunity to avoid being left behind.
Japan was the first country to establish a regulatory framework for stablecoins two years ago. The country has taken a more cautious approach compared to the United States until now.
Central Bank Policy Shift
The Bank of Japan is widely expected to raise interest rates in the coming months. Leading bankers and traders anticipate rate hikes while the U.S. Federal Reserve is seen doing the opposite.
🇯🇵⚖️ Japan is preparing for its first yen-denominated stablecoin launch this fall, with JPYC leading the initiative. This coincides with the Bank of Japan’s expected interest rate hike, set to boost the yen’s appeal.
The anticipated BOJ rate hike and strengthening yen could draw… pic.twitter.com/3q9BkywB9E
— Osiris News (@NewsOsiris) August 31, 2025
Hiroshi Nakazawa, head of Hokuhoku Financial Group, said the BOJ could raise rates in October or December. He expects this will happen if “things go smoothly.”
Bloomberg Economics forecasts a 25 basis point rate hike at the BOJ’s October meeting. The team believes recent Tokyo inflation data reinforced the central bank’s view that consumer prices remain on track to reach the 2% target.
The BOJ raised rates twice in recent years. It moved from 0.1% to 0.25% in July last year, then added another 25 basis points in January.
Bond Market Impact
Japanese government bond yields have climbed to multi-decade highs. The 30-year JGB yield recently surged to a record high of over 3.2%.
The 10-year yield reached 1.64%, levels not seen since 2008. This reflects fiscal concerns and strong expectations of an upcoming BOJ rate hike.
The gap between U.S. and Japanese 10-year yields has narrowed to 2.62%. This represents the lowest level since August 2022.
Currency Effects
The strengthening yen has impacted cryptocurrency markets priced in the Japanese currency. Bitcoin priced in yen has dropped 8% this month on the bitFlyer exchange.
The BTC/JPY pair hit its lowest level since July 9. Technical analysis suggests further downside potential to approximately 14,922,907 JPY.
A regression analysis by MacroMicro suggests the USD/JPY pair should trade around 144.43. This compares to Friday’s level of approximately 147.00, pointing to yen appreciation.
AloJapan.com