- JPYC launched Japan’s first regulated yen stablecoin under Payment Services Act compliance framework established June 2023.
- Company targets 10 trillion yen issuance matching USDC scale using interest-based revenue model with zero fees.
- Launch challenges dollar dominance in $297 billion stablecoin market offering Asian alternative to US regulation.
JPYC Inc. launched Japan’s first regulated yen-pegged stablecoin on October 27, marking a significant development in Asia’s digital currency landscape.
The launch introduces regulatory-compliant stablecoin infrastructure in the world’s third-largest foreign exchange market, representing approximately 17% of global forex trading volume.
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Consumer Protection Is The Key
The stablecoin market currently stands at $297 billion, with 99% denominated in US dollars. JPYC’s entry challenges this concentration, offering an alternative backed by the Japanese regulatory framework established in June 2023. The company targets $67 billion (10 trillion yen) in issuance within three years, rivaling USDC’s current $40 billion market capitalization.
Japan adopted strategies that prioritize consumer protection and financial stability. The Payment Services Act restricts issuance to banks, funds transfer operators, and trust companies, mandating 100% or greater reserve backing in yen deposits and Japanese government bonds.
This framework emerged as a preventive measure following the 2022 TerraUSD collapse, establishing guardrails before market expansion.
JPYC is a Type II funds transfer operator, the first company to receive licensing under the new regulatory regime. For regulated platform transactions, the company faces a transaction limit of 1 million yen per transfer.
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Revenue Model and Technical Infrastructure
JPYC’s business model centers on interest income from reserve assets rather than transaction fees. The company offers zero-fee issuance, redemption, and transfers, enabled by reserves held in interest-bearing deposits and government bonds. With a 1% average government bond yield, 1 trillion yen in issuance would generate approximately 10 billion yen in gross profit.
However, some analysts have pointed out potential vulnerabilities in this model as Japanese government bond yields continue to rise.
On X (Twitter), market commentator @ghoulpresident noted that the 10-year JGB yield has reached 1.6%, up 1.4 percentage points over the past two years. He warned that even a 1% rise in yields adds more than ¥100 billion in annual interest costs per ¥1 trillion of newly issued debt, highlighting the fiscal strain amid a debt-to-GDP ratio exceeding 250%.
The debt is trading at a 10pt premium, which in reality suggests either stagnant or decreasing interest rates. The 1B of the debt is a fraction of what they owned as the anchored the whole thing. It could’ve been done for any reason. That it was offloade