Japan enters stablecoin market to strengthen digital economy

The world’s first stablecoin pegged to the yen has been issued domestically in Japan today, marking a significant step for the country’s integration into the digital asset market where many consumers still prefer to use conventional payment means like cash and credit cards.

A Japanese startup, JPYC has begun issuing the stablecoins, also called JPYC, which are exchangeable for yen and backed by domestic savings and Japanese government bonds (JGBs).

The company's ultimate objective is to issue 10 trillion-yen (or about $66 billion) worth of JPYC over three years and have the digital assets used globally.

The company initially has no plans to charge processing fees to encourage its usage and instead aims to earn money from interests on holdings of JGBs.

In this connection, CEO Noritaka Okabe held a press briefing stating, “We hope to spur innovation by giving startups access to low transaction and settlement fees.”

He further added, “Increasing global interoperability would benefit us too, so we’re open to capital tie-ups.”

According to the Bank for International Settlements, dollar-pegged stablecoin have risen dramatically and now account for over 99% of global stablecoin supply.

It has been observed that interest in stablecoins has been accelerating, and Japan’s three megabanks will jointly issue stablecoins.

While lawmakers have been expressing concerns that stablecoins could facilitate the movement of funds outside the supervised financial systems and potentially undermine the role of commercial banks in global payment flows.

Nonetheless, the new step might emerge as a prominent player in advancing digital financial usage in Japan and partially replacing the role of bank deposits, with the aim of promoting broader adoption of digital assets within the country and across the globe.