Japan’s move toward a yen-denominated stablecoin is colliding with a growing consensus that the Bank of Japan (BOJ) will lift interest rates later this year — a combination that could make yen and JPY-backed crypto assets more attractive to investors and payments firms.
Tokyo fintech firm JPYC is preparing to register as a money-transfer business and aims to roll out a JPY-pegged stablecoin that trades 1:1 with the yen, and Tokyo-based Monex Group has signaled it’s also considering a yen stablecoin for remittances and corporate settlements. Stablecoins tied to major fiat currencies are widely used to move value on-chain while avoiding the volatility of other cryptocurrencies, and a native JPY option would fill a regional gap for Asia-focused crypto flows.
Why timing matters: Markets increasingly expect the BOJ to raise rates — Bloomberg Economics and several bankers forecast a 25 basis point hike as soon as October — while U.S. rates are seen easing. Higher Japanese yields and a narrowing U.S.-Japan yield gap can strengthen the yen, which in turn raises the appeal of yen-backed assets, including any JPY stablecoins that offer interest-bearing options or easier access to domestic liquidity.
Longer-dated Japanese government bond yields have climbed to multi-decade highs — the 30-year JGB hit above 3.2% and the 10-year around 1.64% — reducing the yield gap with U.S. Treasuries and suggesting potential yen appreciation versus the dollar. A tighter yield differential historically correlates with a stronger JPY and a lower USD/JPY exchange rate.
Market implications for crypto
Expect two linked effects in crypto markets: first, demand for JPY-pegged stablecoins may rise for cross-border payments and corporate settlements; second, yen strength can put downward pressure on crypto prices quoted in JPY. Bitcoin priced in yen (BTC/JPY) has already fallen ~8% this month and formed a bearish double-top pattern, with a technical measured-move target near 14,922,907 JPY.
Risks to watch: Regulatory approval timelines can slip, and stablecoin adoption depends on trust, custody, and liquidity providers. Market moves tied to central-bank policy are also volatile; yield shifts or policy misreads can quickly reverse currency and crypto flows. Past events, such as the Terra collapse, remind traders that stablecoin markets can carry counterparty and design risks.
In short, a regulated JPY stablecoin plus BOJ tightening would be a meaningful development for Asia-focused crypto payments and trading. Traders and treasury teams should watch FSA approvals, BOJ meeting signals, JGB yields, and liquidity in any newly issued JPY stablecoins.
Source: CoinDesk. Read the original coverage for full details.