JPYC plans to boost holdings of Japanese government bonds

JPYC, a yen-pegged stablecoin issuer, has announced plans to invest heavily in Japanese government bonds over the next several years. The company began issuing the JPYC yen-pegged stablecoin on October 27, and aims to influence the central bank’s control over monetary policy.

JPYC has disclosed that it has issued nearly 143 million yen worth of JPYC stablecoin tokens to date. It also noted that the number of account holders reached 4,707 as of November 12.

The company has stated that it intends to issue 10 trillion yen (~$66.32 billion) worth of JPYC over three years. However, it acknowledges that its JPYC project is still a drop in the ocean of a 290-billion-dollar stablecoin market. 

Meanwhile, the stablecoin issuer is committed to establishing the yen’s presence in a market where U.S.-dollar-backed stablecoins make up nearly 99% of the global supply, according to JPYC’s CEO Noritaka Okabe.

Okabe says Japan must ensure yen presence in global stablecoin market 

The JPYC executive said in an interview with Reuters that various assets are now being traded on blockchains in real-time globally. However, he noted that the U.S. dollar disproportionately dominates the stablecoin market. 

Okabe emphasized that this U.S. dollar dominance disadvantages Japanese firms that need to pay extra transaction and hedging costs. Meanwhile, the JPYC boss thinks Japan must ensure the yen has a presence in the global stablecoin market. 

JPYC stated that its stablecoin project is fully convertible to the yen and backed by domestic savings, as well as Japanese government bonds (JPGBs). The company has unveiled plans to invest up to 80% of its proceeds in JGBs and 20% in bank savings. 

“With the BOJ tapering bond buying, stablecoin issuers could emerge as the biggest holders of JGBs in the next few years.” 

–Noritaka Okabe, CEO of JPYC

Okabe also pointed out that, given the rapid growth of stablecoins, issuers could help Japan fill a gap left behind by the diminishing presence of the Bank of Japan (BOJ). He added that the increasing presence of yen stablecoin issuers could influence the BOJ’s monetary policy. Okabe noted that the volume of JGBs bought by such issuers is swayed by the balance of demand and supply for stablecoins. 

BOJ still holds 50% of the JGB market

The BOJ reportedly still holds 50% of the 1,055-trillion-yen JGB market. However, it has slowed bond purchases, which it began last year as part of its efforts to phase out a massive decade-long stimulus. 

Meanwhile, Okabe believes that while authorities could try to control the duration of bonds stablecoin issuers buy, it would be difficult for them to control the volume they hold. He mentioned that the control of bond durations by authorities will occur worldwide, and Japan is no exception.

The JPYC CEO also disclosed his company’s plan to buy mostly short-term securities. However, he said government officials and lawmakers were approaching him about whether JPYC could buy more longer-term JGBs. Okabe believes this is a possibility and said it is something his company can look into in the future.

Noritaka Okabe disclosed that Japan’s three largest banks are planning to experiment with jointly issuing stablecoins. He noted that U.S.-dollar-backed stablecoins have surged with strong backing from President Donald Trump, urging Japan to follow suit. 

However, policymakers warn that stablecoins could facilitate the movement of funds outside regulated banking systems. Okabe says this will undermine the role of commercial banks in global payment flows. 

Meanwhile, JPYC’s partnerships and megabank initiatives are expected to accelerate the adoption of yen-backed stablecoin, creating a flywheel of use cases and liquidity. Japan’s FSA has also created a sandbox for innovation, reducing compliance risks for early adopters.

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