Asia Morning Briefing: What's the Real Use for a Yen Stablecoin?

Japan has launched Asia's first yen-backed stablecoin, aiming to enhance decentralized finance (DeFi) opportunities through the yen's convertibility. The Bank of Japan's low interest rates make the yen an attractive funding currency, even in a tightening cycle. The stablecoin allows traders to leverage Japan's cheap liquidity while pursuing higher yields in dollar-linked assets via DeFi protocols. With a low benchmark rate, even if rates are raised, the on-chain yields will remain significantly more favorable than traditional money markets in Japan. Platforms like Maple and Stream Finance offer annual returns between 6% and 14%, enticing traders to pursue yield in foreign-denominated assets. However, the current trading limit of ¥1 million restricts the stablecoin's market impact, reflecting Japan's cautious financial architecture.

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