By Leika Kihara
TOKYO (Reuters) -The world’s first stablecoin pegged to the yen launched in Japan on Monday, a small but significant move in a country where many consumers still prefer to use traditional payment means like cash and credit cards.
JPYC, a Japanese startup, began issuing the stablecoins – also called JPYC – which are fully convertible to the yen and backed by domestic savings and Japanese government bonds (JGBs).
The company aims to issue 10 trillion yen ($66 billion) worth of JPYC over three years and have the digital assets used widely overseas. It does not initially plan to charge transaction fees to encourage its usage, and instead aims to earn money from interest on holdings of JGBs.
“We hope to spur innovation by giving startups access to low transaction and settlement fees,” CEO Noritaka Okabe told a press briefing.
“Increasing global interoperability would benefit us too, so we’re open to capital tie-ups,” he added.
Blockchain-based stablecoins are typically pegged to a fiat currency and offer faster and cheaper transactions.
With strong backing from U.S. President Donald Trump, stablecoins pegged to the U.S. dollar have surged and now account for over 99% of global stablecoin supply, according to the Bank for International Settlements.
Interest in stablecoins is also gaining momentum globally, and Japan’s three megabanks will jointly issue stablecoins, the Nikkei daily reported this month.
Tomoyuki Shimoda, a former Bank of Japan executive who is currently an academic at Japan’s Rikkyo University, said yen stablecoins are not going to have the same momentum as those backed by the U.S. dollar – the world’s reserve currency used across the globe.
“There’s a lot of uncertainty on whether yen stablecoins will become widespread in Japan,” he said. “If megabanks join the market, the pace could accelerate. But it could still take at least two to three years.”
Policymakers have expressed concern that stablecoins could facilitate the movement of funds outside regulated banking systems and potentially undermine the role of commercial banks in global payment flows.
“Stablecoins might emerge as a key player in the global payment system, partially replacing the role of bank deposits,” BOJ Deputy Governor Ryozo Himino said in a speech last week, urging global regulators to adapt.
Elsewhere in Asia, South Korea has pledged to allow companies to introduce won-based stablecoins and China, too, is considering allowing usage of yuan-backed stablecoins.
($1 = 150.7800 yen)
(Reporting by Leika Kihara; Editing by Sonali Paul and Edwina Gibbs)
