TOKYO, Japan: Japan has launched the world’s first yen-pegged stablecoin, marking a slight but notable step toward digital payments in a country where cash and credit cards still dominate.

Japanese startup JPYC began issuing the stablecoin, also called JPYC, which is fully backed by yen deposits and Japanese government bonds (JGBs) and can be converted 1:1 with the national currency.

The company plans to issue up to 10 trillion yen (US$66 billion) worth of JPYC over the next three years and promote its use abroad. To encourage adoption, it will initially waive transaction fees and instead earn revenue from interest on JGB holdings.

“We hope to spur innovation by giving startups access to low transaction and settlement fees,” said CEO Noritaka Okabe. “Increasing global interoperability would benefit us too, so we’re open to capital tie-ups.”

Stablecoins, digital tokens tied to traditional currencies, offer faster, lower-cost transfers and have grown rapidly worldwide, especially those pegged to the U.S. dollar, which account for more than 99 percent of the global stablecoin market, according to the Bank for International Settlements.

Japan’s entry into the sector follows strong global interest. The Nikkei daily reported this month that the country’s three megabanks are reportedly planning to issue their own stablecoins.

Still, analysts are cautious about how quickly yen-backed tokens will take hold.

“There’s a lot of uncertainty on whether yen stablecoins will become widespread in Japan,” said Tomoyuki Shimoda, a former Bank of Japan official now at Rikkyo University. “If megabanks join the market, the pace could accelerate. But it could still take at least two to three years.”

Policymakers have expressed concerns that stablecoins could allow funds to move outside regulated banking systems, potentially undermining commercial banks’ role in global payments.

“Stablecoins might emerge as a key player in the global payment system, partially replacing the role of bank deposits,” BOJ Deputy Governor Ryozo Himino warned last week, calling for tighter international oversight.

Elsewhere in Asia, South Korea is preparing to allow won-backed stablecoins, while China is considering similar plans for yuan-based tokens — signaling a broader regional race to link traditional finance with blockchain innovation.