Japan to approve its first yen-denominated stablecoin as early as this fall: report

Japan's Financial Services Agency is expected to approve the issuance of the country's first yen-pegged stablecoin as early as this fall, local news outlet Nikkei reported Sunday.

The subject of approval is Tokyo-based fintech company JPYC's stablecoin of the same name. The company plans to register itself as a money transfer business with the FSA within August, the report said. The company is expected to initiate the token sale in the week following the registration.

To support its peg to the Japanese currency, the JPYC stablecoin will reportedly be backed by highly liquid assets such as deposits and government bonds. Its potential use cases include international remittances, corporate payments and DeFi.

JPYC aims to issue 1 trillion yen ($6.78 billion) worth of its stablecoin across three years. The company has already attracted several hedge funds that expressed interest in the stablecoin, the report said.

Japan has taken early steps to regulate stablecoins. In June 2022, the Japanese parliament passed amendments to the Payment Services Act that recognized fiat-pegged stablecoins as "Electronic Payment Instruments." The amendments also stipulated that only licensed banks, service providers and trust companies would be allowed to issue such stablecoins. In the following year, the country officially defined stablecoins as "currency-denominated assets."

Several major players in the local financial sector have since begun efforts to branch out to stablecoins. This includes Sumitomo Mitsui Financial Group (SMBC), Japan's second-largest bank, which announced plans to launch a stablecoin in collaboration with Ava Labs and Fireblocks earlier this year.