On Monday, JPYC launched a yen-pegged stablecoin.
The Tokyo-based startup’s token, called JPYC, is fully backed by yen deposits and Japanese government bonds. It aims to provide a regulated bridge between traditional banking and blockchain-based payments.
“We hope to spur innovation by giving startups access to low transaction and settlement fees,” Noritaka Okabe, CEO of JPYC, said during a press briefing, Reuters reported. “Increasing global interoperability would benefit us too, so we’re open to capital tie-ups.”
Yen deposits and Japanese government bonds fully back the coin and is the first domestically regulated yen-pegged stablecoin; GYEN launched earlier under US oversight in 2021.
Shift towards digital finance
The launch comes as dollar-pegged stablecoins make up 99.6% of the $308 billion market, according to data from DefiLlama. By comparison, yen-pegged stablecoins represent 0.2% of the total stablecoin market.
“Stablecoins are strengthening dollar dominance,” a16z Crypto wrote in a new report. The analysts noted that stablecoin issuers now rank as the 17th-largest holders of US Treasuries, up from 20th last year.
Collectively, they hold over $150 billion in Treasury bills, which is more than the central banks of many sovereign nations.
And a16z Crypto forecasts that the sector is set to grow tenfold to more than $3 trillion by 2030. Citibank has made similarly bullish calls, projecting $4 trillion by 2030.
Stablecoins worth $66 billion
JPYC’s new launch is seemingly an attempt to get in on the action.
The firm aims to issue up to ¥10 trillion, worth about $66 billion, of the new stablecoin over the next three years, according to the company’s announcement.
To encourage adoption, the firm will not charge transaction fees at launch and instead plans to generate income from interest on its bond holdings.
The stablecoin’s structure complies with Japan’s updated regulations on digital money, designed to ensure investor protection and transparency.
The debut comes as Japan’s three megabanks, Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho, prepare to launch their own stablecoins, reports Nikkei Asia.
To be sure, experts say it’s unlikely that yen-pegged stablecoins will be as successful as those pegged to the greenback — that is, unless institutions buy into the market segment.
“There’s a lot of uncertainty on whether yen stablecoins will become widespread in Japan,” Tomoyuki Shimoda, a former Bank of Japan official now teaching at Rikkyo University, told Reuters. “If megabanks join the market, the pace could accelerate. But it could still take at least two to three years.
