Japan Lanches the World’s First Yen Stablecoin—Here’s Why It Could Reshape Asian Crypto Settlements

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While dollar-backed stablecoins continue their stranglehold on the global market—commanding 99% of the $286 billion sector—Japan just made a move that could finally give Asia its own digital currency heavyweight.

Tokyo-based fintech startup JPYC launched the world’s first fully regulated yen-pegged stablecoin on Oct. 27, marking what could be a turning point for investors tired of depending solely on U.S. dollar-denominated digital assets in an increasingly multipolar financial world.

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The JPYC stablecoin maintains a strict 1:1 peg with the Japanese yen and operates under Japan’s Payment Services Act, backed by domestic savings and Japanese government bonds. But what sets this apart from similar experiments in South Korea, Taiwan and elsewhere across Asia is simple: the yen is freely convertible globally.

That matters because China, South Korea and Taiwan have all considered stablecoin projects, but their currencies face restrictions that limit international circulation. The yen doesn’t have that problem—it’s the world’s third-most-traded currency and accounts for nearly 17% of global foreign exchange transactions, according to Reuters.

“We hope to spur innovation by giving startups access to low transaction and settlement fees,” CEO Noritaka Okabe told Reuters.

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JPYC plans to issue 10 trillion yen ($64.9 billion) worth of the stablecoin over three years and won’t charge transaction fees initially. Instead, the company will generate revenue from interest earned on its holdings of Japanese government bonds—a sustainable model given that JGBs are currently yielding more than 3% at the long end, reported Reuters.

Here’s where things get interesting for traders: the USD/JPY currency pair is one of the most actively traded worldwide, with the U.S. dollar involved in 89% of all trades and the Japanese yen featured in 16.85%, according to Reuters.

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With both the U.S. and Japan now regulating fiat-pegged stablecoins, there’s potential for a thriving on-chain USD/JPY market pairing dollar- and yen-pegged stablecoins on decentralized exchanges. That could reduce transaction costs and settlement times for the hundreds of billions of dollars traded daily in this currency pair.