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Japan’s top financial regulator, the Financial Services Agency (FSA), is preparing to allow the first stablecoins tied to the yen later in 2025, according to a report by The Nihon Keizai Shimbun.

If approved, it would be the first time a yen-pegged digital currency is officially recognized in the country.

The first launch is expected to come from JPYC, a fintech company based in Tokyo. According to Japanese outlet Nikkei, JPYC will register as a money transfer business within the month. Once that process is complete, the company will begin rolling out its tokens.

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Each JPYC token will match one yen in value. To keep this link steady, the firm plans to back its coins with secure reserves, including commercial bank deposits and Japanese government bonds.

After individuals or businesses apply to purchase, payment will be made through bank transfer, and the stablecoins will then be sent to digital wallets.

Okabe, a representative of JPYC, has argued that yen-backed coins could influence the government bond market. In the US, leading stablecoin firms hold large amounts of Treasury bills as reserves.

If JPYC grows in scale, he suggested a similar pattern could appear in Japan, with higher demand for Japanese government bonds (JGBs).

He also cautioned that countries moving too slowly on stablecoin regulation may face rising borrowing costs, since they miss out on this new type of institutional demand.

On August 4, the European Central Bank (ECB) confirmed that traditional banknotes and coins will remain part of Europe’s payment system. What did the agency say? Read the full story.