Japan did what its Asian peers could not do: launched a stablecoin that could circulate globally.
Japan’s JPYC today announced the world’s first yen-pegged stablecoin, a fully redeemable digital yen backed by domestic deposits and Japanese Government Bonds (JGB). The stablecoin issuer said it would not charge transaction fees and instead generate income from interest on JGB holdings.
Here’s what sets it apart from its regional peers: Unlike the Korean won or Taiwan dollar, both of which are national currencies under local law, the Japanese yen is freely convertible and can be used abroad.
Following reforms in the 1980s that dismantled Japan’s postwar capital controls, the yen became fully usable outside the country via the Euro-yen market, where banks and investors around the world borrow, lend, and trade the currency without restrictions – unlike the South Korean won, which remains limited to domestic use under strict exchange controls intended to limit speculation. offshore and to preserve monetary stability.
There’s a reason the yen is one of the most traded currencies in the world.
Seoul’s won policy preserves monetary control but leaves little room for a global stable currency to breathe. A won-backed token would be limited to whitelisted Korean users and primarily domestic regulations, making it a niche product in a market where instant and free interbank transfers already exist.
Taiwan faces a similar situation. Its dollar is technically convertible, but is not used abroad. Taipei’s stable framework, introduced in June, mandates full onshore reserves and reporting to the central bank to prevent cross-border leakages. An NTD stablecoin could exist, but only on the island, lacking the global liquidity that gives stablecoins their utility.
Hong Kong could be the exception. The HKD is pegged to the US dollar (in a band) and there are no restrictions on its use abroad. In fact, it is itself a stablecoin, so one might wonder why you wouldn’t just use a US dollar stablecoin instead.
The Bank of Japan’s openness to global use of its currency is precisely what gives a stable yen currency real utility beyond Japan’s domestic payments ecosystem.
With interest rates rising and Japanese government bonds yielding over 3% in the long term, the launch couldn’t have come at a better time. JPYC does not need to charge fees or seek speculative yield from its stablecoin, as it can operate sustainably through the interest earned on its JGB reserves.
On-chain foreign exchange market
The daily volume of global currency trading averages around $7 trillion, reaching a record high of $9.6 trillion per day in April this year, according to the BIS. In April, the USD was involved in 89% of all trades, while the Japanese yen was in 16.85%, making the USD/JPY pair one of the most actively traded currency pairs in the world.
With the US and Japan now regulating fiat-pegged stablecoins, there is strong potential for a thriving on-chain USD/JPY market combining dollar and yen-pegged stablecoins.
Such a pool would bring one of the world’s most traded currency pairs onto decentralized rails, connecting two fully reserved and regulated fiat tokens.
If both sides gain liquidity and buyback depth, this could form the backbone of Asian crypto settlement and mark the start of a truly multi-currency stable economy.
All this considered, one has to wonder if there is a demand for this. Euro stablecoins have been around for a while – the currency is designed to be supranational and used across borders – but the market capitalization of the largest ones is tiny.
The yen may have the legal clarity and convertibility that others lack, but whether global traders actually want another fiat-backed token beyond the dollar remains an open question.
