Japan has done what its Asian peers can’t: launch a stablecoin that can circulate globally.
Japan’s JPYC announced today 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 that it won’t charge a transaction fee and instead generate revenue from interest on holdings of JGBs.
Here’s what makes it stand out from regional peers: Unlike the Korean Won or Taiwan dollar, which are both onshore currencies by local law, Japan’s Yen is freely convertible and can be used offshore.
Following reforms in the 1980s that dismantled Japan’s postwar capital controls, the yen became fully usable outside the country through the euro-yen market, where global banks and investors borrow, lend, and trade the currency without restrictions — unlike South Korea’s won, which remains confined to onshore use under strict foreign exchange controls designed to limit offshore speculation and preserve monetary stability.
There’s a reason why the Yen is one of the world’s most traded currencies.
Seoul’s policy for the won preserves monetary control but leaves little room for a global stablecoin to breathe. A won-backed token would be limited to whitelisted Korean users and mostly domestic settlements making it a niche product in a market where instant, free interbank transfers already exist.
Taiwan faces a similar bind. Its dollar is technically convertible, but not used offshore. Taipei’s stablecoin framework, introduced in June, mandates full onshore reserves and central bank reporting to prevent cross-border leakage. An NTD stablecoin could exist, but only on the island, stripped of the global liquidity that gives stablecoins their purpose.
Hong Kong might be the exception. The HKD is pegged to the U.S dollar (within a band), and no restrictions exist on its use offshore. Effectively in itself it is a stablecoin, so one might wonder why you wouldn’t just use a U.S. dollar stablecoin instead.
The Bank of Japan’s openness to the global use of its currency is precisely what gives a yen stablecoin real-world utility beyond Japan’s domestic payments ecosystem.
With interest rates rising and Japanese government bonds yielding more than 3% at the long end, the launch couldn’t come at a better time. JPYC doesn’t need to charge fees or chase speculative yield of its stablecoin as it can operate sustainably off the interest earned on its JGB reserves.
On-chain FX market
The daily global FX trading volume averages around $7 trillion, reaching a record high of $9.6 trillion per day in April this year, according to BIS. As of April, the USD was involved in 89% of all trades, while the Japanese yen featured in 16.85%, making the USD/JPY pair one of the most actively traded currency pairs worldwide.
With both the U.S. and Japan now regulating fiat-pegged stablecoins, there is strong potential for a thriving on-chain USD/JPY market pairing dollar- and yen-pegged stablecoins.
Such a pool would bring one of the world’s most traded currency pairs onto decentralized rails, linking two fully reserved, regulated fiat tokens.
If both sides gain liquidity and redemption depth, it could form the backbone of Asian crypto settlement and mark the start of a true multi-currency stablecoin economy.
All this considered, one has to wonder if there’s demand for this. Euro stablecoins have existed for some time – the currency is designed to be supranational and used beyond borders – but the market cap for the largest is tiny.
The yen may have the legal clarity and convertibility others lack, but whether global traders actually want another fiat-backed token beyond the dollar is still an open question.
