Japan has done what its Asian peers cannot: launch a stablecoin that can circulate globally.
Japan’s JPYC today announced the world’s first yen-pegged stablecoin, a fully redeemable digital yen backed by national deposits and Japanese government bonds (JGB). The stablecoin issuer said it will not charge a transaction fee and will instead generate income from interest on JGB holdings.
This is what sets it apart from its regional peers: unlike the Korean won or the Taiwanese dollar, which are national currencies under local law, the Japanese yen is freely convertible and can be used abroad.
Following reforms in the 1980s that dismantled postwar capital controls in Japan, 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 domestic use under strict exchange controls designed to limit speculation. extraterritorial and preserve monetary stability.
There is a reason why the yen is one of the most traded currencies in the world.
Seoul’s won policy preserves monetary control but leaves little room for a global stable currency 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 free, instant interbank transfers already exist.
Taiwan faces a similar situation. Your dollar is technically convertible, but it is not used abroad. Taipei’s stablecoin framework, introduced in June, requires full domestic reserves and central bank reporting to prevent cross-border leaks. An NTD stablecoin could exist, but only on the island, stripped of the global liquidity that gives stablecoins their purpose.
Hong Kong could be the exception. The HKD is pegged to the US dollar (within a band) and there are no restrictions on its use abroad. Effectively, it is itself a stablecoin, so one might wonder why one would not simply use a US dollar stablecoin.
The Bank of Japan’s openness to global use of its currency is precisely what gives the yen stablecoin real-world utility beyond Japan’s domestic payments ecosystem.
With interest rates rising and Japanese government bonds yielding more than 3% over the long term, the launch couldn’t come at a better time. JPYC does not need to charge fees or chase speculative returns from its stablecoin as it can operate sustainably with the interest earned on its JGB reserves.
On-chain forex market
Global daily foreign exchange trading volume averages around $7 trillion, reaching a record high of $9.6 trillion per day in April this year, according to the BIS. In April, the USD participated in 89% of all trades, while the Japanese yen participated in 16.85%, making the USD/JPY pair one of the most traded currency pairs in the world.
With both the United States and Japan now regulating fiat-pegged stablecoins, there is great potential for a thriving USD/JPY on-chain market combining dollar- and yen-pegged stablecoins.
Such a pool would bring one of the world’s most traded currency pairs onto decentralized rails, linking two regulated and fully reserved fiat tokens.
If both sides gain liquidity and swap depth, it could form the backbone of the Asian crypto settlement and usher in a true multi-currency stablecoin economy.
Considering all this, it is worth wondering if there is demand for this. Euro stablecoins have been around for some time (the currency is designed to be supranational and used across borders), but the market capitalization of the largest ones is small.
The yen may have the legal clarity and convertibility that others lack, but it is still an open question whether global traders really want another fiat-backed token beyond the dollar.
