Yen stablecoin issuer predicts growing presence in Japan's bond market

Stablecoin issuers may become significant players in Japan’s bond market over the next few years, potentially affecting the central bank’s control over monetary policy, according to Noritaka Okabe, CEO of JPYC, the country’s first issuer of yen-pegged stablecoins.

Tokyo-based startup JPYC launched its yen-backed stablecoin, also named JPYC, on October 27. Despite Japan’s strong preference for traditional payment methods like cash and credit cards, the initiative marks a major step in the country’s digital finance sector.

Since the launch, JPYC has issued around 143 million yen worth of coins and reached 4,707 account holders as of November 12. The company’s goal is to issue 10 trillion yen ($66.32 billion) in stablecoins within three years.

Although the amount is still minor compared to the $290 billion global stablecoin market, JPYC aims to give the yen a stronger position in a sector currently dominated by U.S. dollar-pegged coins, which account for 99% of global supply.

“Today, assets are traded in real-time on blockchains worldwide, but the stablecoin market’s dominance by the dollar puts Japanese firms at a disadvantage due to hedging and transaction costs,” Okabe said. “Japan must ensure that the yen also has a presence in the global stablecoin market.”

JPYC’s stablecoin is fully backed and convertible to yen, supported by domestic savings and Japanese government bonds. The firm invests about 80% of its proceeds in JGBs and 20% in bank deposits.

Given the expected expansion of stablecoins, issuers like JPYC could eventually become major bondholders, helping to fill the gap left by the Bank of Japan as it reduces its bond-buying operations.

“With the BOJ tapering its purchases, stablecoin issuers could emerge as the biggest holders of JGBs in the coming years,” Okabe said.

He added that such growth could impact monetary policy, as the volume of bonds held by stablecoin issuers would depend on the supply and demand dynamics of the stablecoin market making it difficult for authorities to control.

The Bank of Japan currently owns around 50% of the 1,055-trillion-yen JGB market but has been gradually reducing its holdings since last year as it winds down its long-term monetary stimulus.

Okabe mentioned that while JPYC currently focuses on short-term bonds, the company may consider purchasing longer-term JGBs in the future following requests from lawmakers and government officials.

“It's something we could explore later,” he said.

Meanwhile, dollar-based stablecoins have gained further traction with political support from U.S. President Donald Trump. Japan’s three largest banks are also preparing a joint experiment to issue stablecoins under the supervision of the country’s financial regulator.

However, policymakers remain cautious, warning that stablecoins could allow capital to move outside regulated banking systems, potentially undermining the role of commercial banks in the global financial infrastructure.