Stablecoin Issuers Could Emerge as Buyers to Fill Japan’s Government Bond Gap

Japan’s first licensed yen stablecoin issuer says digital asset firms could soon become powerful new players in the country’s government bond market, potentially reshaping how monetary policy works.

Tokyo-based JPYC, which launched its fully regulated yen-pegged token on October 27 under Japan’s revised Payment Services Act, plans to invest most of its reserves in Japanese government bonds (JGBs). Founder and CEO Noritaka Okabe told Reuters that as stablecoin circulation grows, issuers could help fill the gap left by the Bank of Japan as it slows its massive bond-buying program.

JPYC has so far issued roughly $930,000 worth of tokens but is targeting around $66 billion in circulation within three years. The token is backed by a mix of bank deposits and JGBs, is fully redeemable for yen, and is built to move seamlessly across multiple blockchains, positioning it as digital cash for Japan’s emerging Web3 economy.

Okabe said JPYC intends to allocate around 80% of issuance proceeds into JGBs and keep 20% in bank deposits, initially favoring short-term securities. Over time, the company could extend into longer-dated bonds if demand and yields justify it. That mix would effectively turn stablecoin issuers into large, market-driven buyers of government debt in a JGB market worth about $7 trillion, where the BOJ still holds roughly half the outstanding bonds.

Okabe argued that the volume of JGBs bought by stablecoin issuers will track user demand for tokens and predicted similar dynamics in other countries as regulated stablecoins scale globally.

His comments come as Japan’s Financial Services Agency backs a new “Payment Innovation Project” for yen-pegged stablecoins involving Mizuho Bank, Mitsubishi UFJ Bank, Sumitomo Mitsui Banking Corporation, Mitsubishi Corporation and Progmat, with issuance expected to begin this month.