Stablecoin issuers in Japan could soon become key players in the country’s sovereign debt market. Noritaka Okabe, CEO of JPYC, the first issuer of a yen stablecoin, stated that the reserves from these assets could fill the gap left by the Bank of Japan (BOJ) as it slows its bond purchases.
JPYC, based in Tokyo, began issuing its token (JPYC) on October 27. This was done under the country’s revised Payment Services Act. The company has issued about $930,000 to date. However, its goal is to reach a circulation of $66 billion within the next three years. This token is backed by a combination of bank deposits and Japanese government bonds (JGBs) and is fully convertible to yen.
JPYC’s plan is clear. They will invest 80% of the issuance proceeds into JGBs. The remaining 20% will be kept in bank savings. Initially, they will focus on short-term securities. Okabe noted that this allocation could give stablecoin issuers in Japan a significant role. The BOJ still holds about half of the $7 trillion JGB market. As the central bank slows its purchases, new buyers are needed to absorb the issuance.
Will blockchain adoption become Japan’s new fiscal financing?
Therefore, Okabe suggested that stablecoin reserves could naturally fill part of the vacuum. This would directly link blockchain adoption to the country’s fiscal financing. “The volumes of JGBs stablecoin issuers buy will be swayed by the balance of supply and demand for stablecoins,” Okabe stated. He noted that this trend “will happen around the world” and Japan will not be an exception.
These statements come at a time of high adoption in Japan’s traditional financial sector. The Financial Services Agency (FSA) recently endorsed a yen-pegged stablecoin project. This project is led by the country’s largest financial institutions, such as Mizuho Bank, Mitsubishi UFJ Bank, and Sumitomo Mitsui Banking Corporation. These entities, along with MUFG’s Progmat platform, will begin issuing their own payment stablecoins this month.
