Digital yen issuers may help fill the Bank of Japan’s shrinking bond-buying role as stablecoin demand grows.
Stablecoin reserves could reshape Japan’s debt market
JPYC, Japan’s first yen-pegged stablecoin issuer, believes stablecoin reserves could soon become a major force in Japan’s $7 trillion government bond market, potentially offsetting reduced bond purchases by the Bank of Japan (BOJ).
In comments reported by Reuters, Noritaka Okabe, founder and CEO of JPYC Inc., said that as the stablecoin industry expands, issuers’ reserves — typically held in safe assets like Japanese Government Bonds (JGBs) — could play a critical role in maintaining market stability.
“The volumes of JGBs stablecoin issuers buy will be swayed by the balance of supply and demand for stablecoins,” Okabe said, adding that this dynamic “will happen around the world — and Japan will not be an exception.”
JPYC launches under Japan’s new stablecoin law
JPYC officially began issuing its yen-backed token (JPYC) on October 27 under the country’s revised Payment Services Act, the first legal framework for stablecoins in Japan.
The company has so far issued about $930,000 worth of tokens and plans to scale to $66 billion in circulation within three years. Each JPYC token is fully backed by yen deposits and JGBs, ensuring convertibility and transparency while allowing users to transact across multiple blockchains.
Investment strategy: 80% in JGBs, 20% in deposits
Okabe revealed that JPYC will allocate 80% of issuance proceeds to Japanese government bonds and the remaining 20% to bank deposits. Initially, the firm will target short-term securities, but may shift toward longer-term JGBs as liquidity and yields evolve.
This investment model could make stablecoin issuers an important new class of institutional bondholders, especially as the BOJ gradually tapers its bond-buying operations.
By filling this gap, stablecoins could “link blockchain adoption to fiscal financing,” Okabe noted.
Japan’s growing push for regulated stablecoins
Japan’s Financial Services Agency (FSA) is actively promoting regulated stablecoin adoption. On Friday, the FSA announced the “Payment Innovation Project,” a major industry initiative involving Mizuho Bank, Mitsubishi UFJ Bank, Sumitomo Mitsui Banking Corporation, Mitsubishi Corporation, and Progmat — the stablecoin issuance platform backed by MUFG.
The consortium plans to issue yen-pegged payment stablecoins this month, aiming to modernize domestic and cross-border payments through blockchain technology.
As Japan transitions to a post-BOJ bond-buying era, regulated stablecoin issuers like JPYC could bridge blockchain innovation and traditional finance, offering new sources of liquidity for sovereign debt while expanding digital payment infrastructure.
If Okabe’s forecast holds, Japan may become a global model for integrating stablecoins into national financial ecosystems, blending monetary policy, debt markets, and blockchain technology into a cohesive framework for the digital economy.
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