Japanese fintech JPYC has confirmed it will issue Japan’s first Yen-backed stablecoin after it received clearance from the country’s Financial Services Agency (FSA).
In a statement published on August 20, JPYC said it will act as a transfer service provider for the stablecoin which will act as a payment instrument for international money transfers and corporate payments.
The stablecoin will be 1:1 backed with yen and supported by liquid asset reserves, such as bank deposits and government bonds. JPYC has set a limit of 1 million for issuance of the stablecoin per business day, however, there is no limit on how much can be transferred or held. There is no issuance fee attached to the JPYC stablecoin.
“Initially, we expect demand to come from institutional investors, hedge funds and family offices in Japan,” said JPYC CEO Noritaka Okabe during a news conference.
“Eventually, we aim to have JPYC used overseas as digital yen and delivered to people across the world.”
According to comments made by former UK Chancellor George Osborne in July, USD-backed stablecoins make up 99% of the global stablecoin market.
Asian cross-border companies are increasingly becoming more interested in the value of stablecoins for international settlements.
An emerging stablecoin market
According to recent research from Stripe, “Asia is positioned to lead the way in weaving stablecoins into the fabric of internet commerce”.
Stripe cites high adoption rates and positive regulatory developments as to why Asia is positioning itself as one of the leading markets for stablecoins, as 46% surveyed companies stated they are planning on adopting stablecoins within the next 24 months.
Japan’s Payment Services Act is the overarching legislation which supports the issuance of stablecoins across banks, trust companies and payment transfers businesses. The legislation mandates stablecoin reserves meet up to 50% of government bonds and bank deposits and are 1:1 backed by the Yen.
Stablecoins being used for cross-border transactions offer a range of benefits, such as near-instant settlement time, removal of intermediaries and lower remittance fees.
The JPYC, if wholly adopted by Japanese payment companies, could benefit relevant businesses as cross-border payments continue to grow amid the current macroeconomic conditions that have occurred this year.
Stripe’s research revealed up to 73% of Asian companies surveyed said they are confident in reaching new markets globally over the next year, as 46% of cross-border payment companies expect international sales to grow within the same timeframe.
