Japan Set to Approve First Yen-Backed Stablecoin

Monicah W

Japan Set to Approve First Yen-Backed Stablecoin

The post Japan Set to Approve First Yen-Backed Stablecoin appeared first on Coinpedia Fintech News

Japan is about to take a major step in digital finance. According to a Nikkei report, the Financial Services Agency (FSA) could approve the country’s first yen-denominated stablecoin as early as this fall. The move reflects Japan’s push to modernize its financial system while keeping tight oversight in place.

JPYC Takes the Lead

The first stablecoin will be launched by Tokyo-based fintech JPYC. The company is registering as a money transfer business with the FSA this month, which is the final step before issuance. If approved, JPYC will start selling its tokens, which will be pegged 1:1 with the yen and backed by cash deposits and Japanese government bonds (JGBs).

JPYC has set bold goals. Within three years, it hopes to issue as much as 1 trillion yen ($6.78 billion) worth of stablecoins. Hedge funds are already showing strong interest, suggesting demand for a regulated yen-backed token is high.

Uses Beyond Crypto

Unlike many stablecoins that are mainly used for crypto trading, JPYC’s token is designed for wider purposes. It could help with cross-border remittances, corporate payments, and decentralized finance (DeFi). For Japanese businesses and individuals, this means faster and cheaper transactions without leaving the country’s regulated financial system.

Japan’s Strict but Supportive Rules

Japan’s approval comes after years of groundwork. In 2022, amendments to the Payment Services Act classified fiat-backed stablecoins as “Electronic Payment Instruments,” limiting issuance to licensed banks, trust firms, and registered providers. By 2023, the country formally labeled stablecoins as “currency-denominated assets,” ensuring robust oversight while clearing the way for adoption.

Ripple Effect on Bonds

JPYC’s arrival could also impact Japan’s bond market. CEO Okabe pointed out that U.S. issuers like Tether and Circle became major buyers of Treasurys as collateral. If Japan follows a similar path, demand for JGBs could rise, potentially reshaping interest rates and drawing more institutional investors. He also warned that countries slow to adopt regulated stablecoins could lose out on this demand, driving up borrowing costs.

Big Banks and Circle Already in the Mix

JPYC isn’t the only player. Sumitomo Mitsui Financial Group (SMBC), Japan’s second-largest bank, has stablecoin plans with blockchain firms Ava Labs and Fireblocks. Circle has also entered the Japanese market; its USDC stablecoin gained FSA approval in March 2025 to trade on SBI VC Trade. Circle is now planning expansion to Binance Japan, bitbank, and bitFlyer, which collectively serve millions of users. 

If approved, JPYC’s yen stablecoin could become a benchmark for Japan’s digital economy, combining blockchain efficiency with financial stability. Together with Circle and big banks, it signals that stablecoins are moving into Japan’s mainstream finance, opening a new era for digital money.

U.S. Push for Stablecoin Regulation

Meanwhile, in the U.S., President Donald Trump has stressed the importance of supporting dollar-backed stablecoins, urging lawmakers to create a clear regulatory framework. With new legislation on the horizon, major banks could soon join the market. Bank of America CEO Brian Moynihan has already stated the bank would enter the business once it becomes legal.

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Blockchain Association Calls for US SEC to Drop Equity Style Crypto Regulation

Blockchain Association Calls for US SEC to Drop Equity Style Crypto Regulation

The Blockchain Association has urged the U.S. Securities and Exchange Commission (SEC) to stop applying equity market structures to the crypto industry. In a formal response to SEC Commissioner Hester Peirce’s request for input on crypto trading practices, the association argued that current approaches are not suitable for the unique features of blockchain technology.

The association’s letter, submitted on May 2, 2025, focuses primarily on topics related to trading, clearing, settlement, and custody in the digital asset space. The group represents a wide range of crypto firms, including Coinbase, Ripple, and Uniswap Labs.

Blockchain Association Request for Flexible Crypto Regulation

According to a recent thread on X, the Blockchain Association is calling on the SEC to adopt a more flexible and evolving regulatory approach for crypto assets under the new US SEC chair Paul Atkins. The existing structure was designed for the traditional equity markets, it says, and it doesn’t factor the decentralized and real time nature of blockchain based systems.

“The Association urged the Commission to refrain from adopting rules, policies, or guidance that would limit who can use blockchain technology or what the technology can be used for,” it said. They also said that blockchain facilitates innovations like real time settlement, disintermediation and lower transaction costs.

Their letter suggests modernizing best execution standards by placing emphasis on the duty of reasonable diligence and increases in transparency. They instead advocate enhanced disclosure instead of imposing strict rules ordering protection as is the case in equities.

Calls to Recognize Blockchain Transparency and Privacy Risks

The Blockchain Association also made note of blockchain’s open, verifiable data structure as a critical tool to monitoring regulatory behavior. Regulators should instead use exchange APIs and data that are publicly available and not gather sensitive personal data, they recommended.

The association, however, did note that there is still a ‘privacy risk,’ citing a June 2024 piece penned by policy executive Marisa Tashman Coppel. The group said that collecting too much personal data could increase the potential for use against users without enhancing surveillance.

In addition, the Blockchain Association further explained that the blockchain’s transparency allows regulators to track activity in real-time without interfering with user privacy. The association believes this offers a better path for regulatory compliance compared to traditional recordkeeping methods.

Past and Present US SEC Approaches Compared

In their submission, the Blockchain Association criticized past SEC leadership for attempting to fit crypto markets into equity-based models. Under former SEC Chair Gary Gensler, the agency often treated most digital assets as securities and pursued enforcement actions against several major firms.

The association claims this approach failed to account for blockchain’s distinct features.

“The previous administration tried to mold crypto market structure along the lines of a stylized view of the equity markets,” the letter said.

The group now supports the direction of the current administration. Chair Paul Atkins, who replaced Gensler, has expressed support for working with lawmakers to build a crypto-friendly framework. Since taking over, Atkins and former acting Chair Mark Uyeda have launched a new crypto task force and hosted public roundtables to gather feedback.

Industry Developments and Regulatory Shifts

As the SEC reassesses its strategy, other major crypto-related events have unfolded. This week, the agency closed its investigation into PayPal’s PYUSD stablecoin without enforcement action. The agency described its discussions with PayPal as productive.

In parallel, Ripple co-founder Chris Larsen met with SEC Chair Atkins. Although the agenda was not disclosed, analysts believe the ongoing XRP lawsuit may have been discussed. Meanwhile, the SEC and Binance have jointly requested more time in their legal proceedings, asking for a 60-day pause.

Across the Atlantic, the UK’s Financial Conduct Authority is also gathering feedback from the public and the industry. The UK regulator is exploring how to define and manage crypto-related services under national law, aiming to bring more clarity to the digital asset space.

The post Blockchain Association Calls for US SEC to Drop Equity Style Crypto Regulation appeared first on CoinGape.