Circle is considering launching a yen-pegged stablecoin following new legislation in Japan

Circle is considering launching a yen-pegged stablecoin following new legislation in Japan

Circle, a digital payments company, is considering launching a stablecoin pegged to the yen. This move follows the new law regulating digital currencies enacted in Japan on June 1st. According to Circle CEO and co-founder Jeremy Allaire, Japan could become a large market for stablecoins, particularly for cross-border remittances, international trade and foreign exchange transactions.

Japan is the first country to introduce a dedicated legal framework for stablecoins. This creates a clear structure for the use of stablecoins such as Circle's USD Coin (USDC) or Tether (USDT) abroad. Allaire considers this a historic step by the Japanese government and financial authorities and is currently exploring partnerships in Japan.

Recently, Circle has been ramping up its operations in Asia. The company recently received a major payment service provider license from the Singapore government. This enables Circle to offer domestic and cross-border money transfers as well as digital payment services.

Under the revised Payment Services Law in Japan, stablecoins are classified as an “electronic payment method.” Unlike other cryptocurrencies, they minimize price fluctuations by pegging their value to the price of another asset, usually a fiat currency like the US dollar. This creates stability and allows stablecoins to act as a reliable medium of exchange in the crypto ecosystem.

Stablecoins have gained popularity due to their potential advantages over traditional cryptocurrencies. These include faster cross-border transactions, lower fees and increased access to decentralized finance (DeFi) applications.

The new Japanese law sets strict rules for stablecoin issuers. These must be pegged to the local currency Yen or another fiat currency and guarantee the right to repayment at face value. Only licensed banks, trust companies and registered money transfer service providers are allowed to issue stablecoins in Japan.

Last year, the Japanese Financial Services Agency lifted the ban on the use of stablecoins abroad. In addition to Circle, other Japanese companies such as Mitsubishi UFJ Trust and Banking Corporation are also exploring the possibilities of stablecoins and planning to launch their own stablecoin platforms, such as the Progmat platform.