Japan’s yen-pegged stablecoin framework enables licensed banks and funds-transfer businesses to issue tokens redeemable 1:1 for Japanese yen. The revised Payment Services Act (2023, amended 2025) mandates reserve backing, quarterly disclosures, and a 1,000,000 yen daily issuance/redemption cap per client to balance safety and commercial use.
Megabanks and JPYC are moving to issue regulated yen-pegged stablecoins this fiscal year under Japan’s tightened Payment Services Act.
Reserve rules now allow up to 50% of backing in low-risk government bonds and fixed-term deposits to improve commercial viability.
Regulatory caps: 1,000,000 yen issuance/redemption per client per business day; JPYC targets one trillion yen issuance within three years (plain text sources: KPMG, Nomura Research Institute, Financial Services Agency).
Yen-pegged stablecoin in Japan: regulated token rollouts by banks and JPYC under revised Payment Services Act—read reserve rules, caps, and adoption timeline. Learn more from COINOTAG.
How does Japan’s yen-pegged stablecoin framework work?
Japan’s yen-pegged stablecoin framework requires issuers to be licensed banks, trust companies, or registered funds-transfer businesses and to back tokens 1:1 with secure assets. The Payment Services Act (2023) and its 2025 amendment mandate reserve safeguards, quarterly disclosures, and operational controls while permitting limited holdings in low-risk instruments to support commercial issuance.
Who is JPYC and why is its license significant?
JPYC became the first Funds Transfer Service Provider (FTSP) licensed under the revised Payment Services Act on August 18, 2024, making it Japan’s inaugural issuer of a yen-denominated stablecoin. The license shows that startups can meet stringent requirements—reserves must be redeemable 1:1 and held in secure assets such as bank deposits and government bonds. JPYC CEO Noritaka Okabe noted that the application scrutiny resembles founding a new financial institution, underscoring high regulatory standards that historically favored legacy banks.
What role are the megabanks playing and what scale is expected?
Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho are collaborating on a common-standard yen and dollar-pegged stablecoin aimed at corporate payments. Collectively the banks serve more than 300,000 major clients and have conducted trial transfers within Mitsubishi Corporation, which comprises roughly 240 operating companies. The banks aim to begin rollouts within the current fiscal year, leveraging institutional credibility to drive enterprise adoption.
How did the 2025 amendment change reserve rules?
The 2025 amendment relaxed prior requirements that reserves be held solely as demand deposits, allowing up to 50% of backing to be invested in low-risk, short-term government bonds and fixed-term deposits. This change intends to make issuance commercially sustainable by permitting modest returns on reserves while preserving liquidity safeguards. Nomura Research Institute (NRI) Senior Economist Takahide Kiuchi emphasized that the amendment balances trust in issuers’ creditworthiness with practical issuance economics (plain text source: Nomura Research Institute).
How do disclosure and supervisory rules compare internationally?
Under Japan’s Financial Services Agency (FSA) supervision, stablecoin issuers must submit quarterly reports detailing reserve composition, custody arrangements, and segregation measures. Experts note this is less frequent than proposals elsewhere—U.S. proposals such as the GENIUS Act call for monthly disclosures—leaving Japan with a model that emphasizes precise regulation over real-time transparency. Yasuyuki Fuchita (Nomura Institute of Capital Markets Research) has previously argued that Japan’s Payment Services Act reflects longstanding legal concepts that privilege bank-issued money.
Frequently Asked Questions
Can individuals use yen-pegged stablecoins in Japan for everyday payments?
Yes. The regulatory framework permits issuance and redemption by licensed entities and does not restrict holdings or peer-to-peer transfers between wallets. However, issuance and redemption operations face a daily cap of 1,000,000 yen per client per business day, which primarily affects larger on/off ramps rather than routine wallet transfers.
How fast and cheap are cross-border payments using stablecoins?
Stablecoins can reduce settlement times from days to seconds and cut costs dramatically. A recent KPMG analysis (plain text reference: KPMG) indicates transaction expenses may fall by up to 99% in some use cases, though real-world results depend on on/off-ramp liquidity, regulatory constraints, and integration with correspondent banking networks.
Key Takeaways
- Regulatory clarity: The Payment Services Act (2023, amended 2025) establishes one of the world’s strictest licensing regimes, limiting issuers to banks, trust firms, and registered funds-transfer businesses.
- Commercial viability: Allowing up to 50% of reserves in low-risk instruments helps issuers earn modest returns while maintaining liquidity safeguards.
- Practical limits and growth targets: Issuance/redemption is capped at 1,000,000 yen per client per business day; JPYC targets one trillion yen issuance within three years, signaling ambition within regulated boundaries.
Conclusion
Japan’s approach to a yen-pegged stablecoin combines strict licensing, detailed reserve requirements, and pragmatic amendments to enable commercial issuance. With megabanks and JPYC preparing rollouts, the regulated stablecoin market could reshape corporate and cross-border payments while prioritizing financial stability. For ongoing coverage and updates, follow COINOTAG. Published: 2025-10-17. Updated: 2025-10-17. Author: COINOTAG.