JPYC Inc. launched Japan’s first regulated yen-pegged stablecoin on October 27, marking a significant development in Asia’s digital currency landscape.
The launch introduces regulatory-compliant stablecoin infrastructure in the world’s third-largest foreign exchange market, representing approximately 17% of global forex trading volume.
Consumer Protection Is The Key
The stablecoin market currently stands at $297 billion, with 99% denominated in US dollars. JPYC’s entry challenges this concentration, offering an alternative backed by the Japanese regulatory framework established in June 2023. The company targets $67 billion (10 trillion yen) in issuance within three years, rivaling USDC’s current $40 billion market capitalization.
Japan adopted strategies that prioritize consumer protection and financial stability. The Payment Services Act restricts issuance to banks, funds transfer operators, and trust companies, mandating 100% or greater reserve backing in yen deposits and Japanese government bonds.
This framework emerged as a preventive measure following the 2022 TerraUSD collapse, establishing guardrails before market expansion.
JPYC is a Type II funds transfer operator, the first company to receive licensing under the new regulatory regime. For regulated platform transactions, the company faces a transaction limit of 1 million yen per transfer.
Revenue Model and Technical Infrastructure
JPYC’s business model centers on interest income from reserve assets rather than transaction fees. The company offers zero-fee issuance, redemption, and transfers, enabled by reserves held in interest-bearing deposits and government bonds. With a 1% average government bond yield, 1 trillion yen in issuance would generate approximately 10 billion yen in gross profit.
However, some analysts have pointed out potential vulnerabilities in this model as Japanese government bond yields continue to rise.
On X (Twitter), market commentator @ghoulpresident noted that the 10-year JGB yield has reached 1.6%, up 1.4 percentage points over the past two years. He warned that even a 1% rise in yields adds more than ¥100 billion in annual interest costs per ¥1 trillion of newly issued debt, highlighting the fiscal strain amid a debt-to-GDP ratio exceeding 250%.
Such dynamics could eventually impact stablecoin issuers like JPYC, which rely on sovereign bond yields as a revenue source.
The company has partnered with payment processors and enterprise software providers to expand merchant acceptance and B2B applications.
Asian Market Implications
JPYC’s strategic significance extends beyond Japan’s domestic market. Though not huge, the yen already functions as a settlement currency in global payments, and a yen-denominated stablecoin could address demand distinct from dollar-based alternatives.
In 2024, stablecoins purchased approximately $40 billion in US short-term Treasury securities, ranking as the third-largest purchaser after JPMorgan’s government money market funds and China. A similar mechanism in Japan could generate sustained demand for Japanese government bonds, providing secondary benefits to fiscal policy.
The stablecoin’s launch coincides with broader developments in Japan’s digital asset sector. Progmat, backed by Mitsubishi UFJ Trust and Banking Corporation, is preparing a trust-based stablecoin offering. SBI VC Trade began facilitating USDC circulation in Japan in March 2025. These established a precedent for domestic and cross-border stablecoin models.
The global stablecoin market recorded transaction volumes exceeding Visa’s payment volume in Q1 2025, indicating an evolution from speculative assets to functional payment infrastructure. JPYC’s entry into this market tests whether regulatory-first frameworks can compete with established, less-regulated alternatives in attracting users and capital.
