The development is “small but significant” in a country where cash and credit cards still enjoy strong popularity, Reuters reported Sunday (Oct. 26).
The stablecoins are named after the startup that is issuing them, JPYC, and are fully convertible to the yen and backed by domestic savings and Japanese government bonds (JGBs), the report said.
JPYC hopes to issue 10 trillion yen ($66 billion) worth of its coin over three years and have it used widely on an international level. It does not plan to charge transaction fees at first to encourage its use, opting instead to earn money from interest on holdings of JGBs, according to the report.
“We hope to spur innovation by giving startups access to low transaction and settlement fees,” JPYC CEO Noritaka Okabe said, per the report. “Increasing global interoperability would benefit us too, so we’re open to capital tie-ups.”
Blockchain-based stablecoins are usually pegged to a fiat currency and provide faster and cheaper transactions. Interest in these coins has surged this year, with dollar-pegged stablecoins now making up 99% of global stablecoin supply, the report said, citing figures from the Bank for International Settlements.
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Interest in stablecoins is gaining outside the United States, with Japan’s three megabanks planning to jointly issue stablecoins, according to the report.
Tomoyuki Shimoda, a former Bank of Japan executive and now an academic at Japan’s Rikkyo University, said in the report that yen stablecoins won’t enjoy the same momentum as those backed by the U.S. dollar, the world’s reserve currency.
“There’s a lot of uncertainty on whether yen stablecoins will become widespread in Japan,” he said, per the report. “If megabanks join the market, the pace could accelerate. But it could still take at least two to three years.”
Meanwhile, stablecoins are now “arguably giving cryptocurrency mainstream legitimacy,” PYMNTS reported last week.
“Stablecoin issuers are no longer operating on the periphery of the banking system,” PYMNTS wrote Friday (Oct. 24). “They are seeking to become part of it. And regulators may be opening the doors, albeit cautiously.”
