As the BOJ Scales Back, Stablecoins Set Sights on Leading the JGB Market Amid Japan's Financial Transformation

JPYC, Japan’s first homegrown stablecoin provider, has unveiled an ambitious plan for its yen-linked digital currency to become a key player in the nation’s government bond sector. Launched on October 27 under the Payment Services Act, the company intends to invest 80% of its backing assets in Japanese government bonds (JGBs) and the remaining 20% in bank accounts, according to a

. CEO Noritaka Okabe shared with Reuters that as the Bank of Japan (BOJ) reduces its bond acquisitions, stablecoin companies could soon become the primary holders of JGBs, Reuters noted.

The company’s approach is based on using the swift expansion of stablecoins to potentially fill the gap left by the central bank’s retreat.

At present, the BOJ owns about half of Japan’s $7 trillion JGB market, but has started to scale back its bond purchases as it unwinds years of monetary easing, Reuters reported. Okabe suggested that stablecoin reserves could help absorb new JGB supply, connecting blockchain technology with public finance. “The amount of JGBs acquired by stablecoin issuers will depend on the market’s demand and supply for stablecoins,” he told Reuters.

The company has set a goal to circulate 10 trillion yen (approximately $66.32 billion) in JPYC stablecoins within three years, Reuters said. Although this would still represent a small share of the global stablecoin market—currently led by U.S. dollar-based tokens—JPYC’s growth could help the yen gain traction in the digital asset space. Okabe highlighted the benefits of a yen-based stablecoin, pointing out that Japanese businesses now pay higher fees for transactions and currency hedging because of the dollar’s dominance, according to Yahoo Finance.

Regulatory momentum is also building. Japan’s Financial Services Agency (FSA) has recently backed a yen-based stablecoin initiative led by the country’s top banks, indicating increasing acceptance of digital currencies in mainstream finance, Cointelegraph reported. However, JPYC’s model raises concerns about the central bank’s ability to steer monetary policy. Okabe admitted that while authorities could affect the maturity of bonds bought by stablecoin issuers, controlling the total amount would be difficult. “This trend will be global, and Japan is no different,” he told Reuters.

JPYC’s vision comes with challenges. Officials have cautioned that stablecoins might divert funds from regulated banks, potentially weakening their role in international payments, Reuters reported. Nevertheless, the company’s collaborations with leading financial institutions and participation in the FSA’s regulatory sandbox point to a viable path for broader adoption. With lawmakers already considering allowing JPYC to invest in longer-term JGBs, the stablecoin’s influence on Japan’s debt market may grow more rapidly than expected, Reuters noted.

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