As part of the company’s recent move into Asia, U.S.-based Circle Ventures, the venture capital arm of the issuer of the world’s second-biggest stablecoin, USDC, has contributed to a 500-million-yen (US$4.38 million) Series A funding round for JPYC Inc., the issuer of the Japanese yen-pegged stablecoin JPYCoin. Having released the stablecoin in January 2021 as a prepaid payment instrument, JPYC Inc. intends to use the funding to increase its position as a stablecoin issuer by improving its operational and developmental capabilities and acquiring prepaid payment instruments for third party-businesses.

A stablecoin is a cryptocurrency whose value is pegged to an underlying asset. The two leading stablecoins in the world are both pegged to the U.S. dollar. USDT is the fourth-largest token with a market cap of US$73.7 billion, and USDC in ninth position with a market cap of US$34 billion, according to data from CoinMarketCap. While the JPYC has not reached a market cap nearly so high, one industry watcher told Forkast.News having a stablecoin based in yen would be of great advantage to Asian investors as cryptocurrency becomes an increasingly mainstream investment.

“We’re looking at Bitcoin as being a gold equivalent, but you’re then moving into the sphere where crypto [could be considered] almost a bond equivalent,” Andrew Sullivan, founder and writer for, told Forkast.News. “So, if you’re going to have bond equivalents, then having them denominated in different currencies [means] people can hedge out their currency risk. And I think for a lot of Asian investors, that may be something that they would look to do … Running [a stablecoin] in a yen denomination just gives you an option of taking out the currency risk.”

The news marks another step into Asia for Circle, after announcing it was establishing a regional hub in Singapore last week, as part of its global expansion plans. Singapore is a popular choice of location for a company looking to gain a foothold in Asia, as its recent approach to crypto business is regarded as the most advanced in the region, with Sullivan describing it as a kind of “regulatory mecca.”

“Singapore has taken a very proactive attitude to dealing with these exchange people,” said Sullivan, adding it has often competed with Hong Kong as the arbitration hub in the region. “It’s not necessarily allowing them to operate freely on its own market, but it’s quite happy to take them under its umbrella, to put in a framework of regulation there so that it can establish itself as the hub for [regulation], which is something that Singapore has been trying to do for years.”

Stablecoins have begun to attract the attention of regulators in the U.S.; a report released earlier this month by a body led by the Treasury Department called on lawmakers to regulate stablecoins, citing concerns over risks they could pose to investors. This sentiment echoes concerns by the chair of the Securities and Exchange Commission, Gary Gensler, who has maintained for months he believes they are securities and should be regulated as such.

Meanwhile, Japanese regulators have not been as strict on crypto regulation as other lawmakers in the region. The most obvious example of this is in neighboring China, which has progressively cracked down on crypto activity this year, starting with mining and moving to a blanket ban on all crypto trading within the country. South Korea, as well, has increased regulatory pressure on crypto trading, leading to many virtual asset exchanges in the country shutting down in recent months.

A report by Chainalysis this year rated Japan 82nd in the world for cryptocurrency adoption between April 2019 and June 2021, which could explain the lack of focus of cryptocurrency the country’s regulators have taken, especially when compared to China and Korea, which were rated 13th and 40th, respectively — though, of course, China’s rating will most likely have fallen significantly following government crackdowns which occurred following the report’s release.

Sullivan attributed Japan’s low rating to its aging population, which has been slow to adapt to newer technologies in general, tending to keep a significant portion of its money within established networks, which in turn creates further downstream costs, such as requiring more branches to remain open to service the group. Because of this low level of scrutiny and the size of Japan’s economy, Sullivan sees the yen to be a natural currency of choice for establishing a stablecoin in the region.

“[Japan] hasn’t really adopted modern technology as much, maybe as some other Asian countries have,” Sullivan said. “So, in that respect, it’s probably not seen as quite such a liability and therefore an easy one to run with.”

Despite their prominent role within the cryptocurrency ecosystem, some stablecoins have had a checkered past when it comes to the transparency of their underlying assets. The issuers behind USDT, Tether and Bitfinex are required as part of a US$18.5 million settlement —  in which neither party admits any wrongdoing —  with the New York State Attorney General to release quarterly reports detailing Tether’s reserves for two years. While the most recent of its reports found the token is 100% backed, an explosive investigative article by Bloomberg released in October reported that may not be the case and that furthermore the company is using its reserves to make crypto-backed loans.

Tether rejected these claims and called the article “another tired attempt to undermine” the company.

Looking at the issues that have plagued stablecoins such as Tether in the past, Sullivan says that transparency is a key thing that will need to be addressed for the JYPC to be sustainable long term.

“That probably raised a lot of questions and highlighted a lot of the areas that both governments and investors would want addressed,” he said. “Where are the assets really being held? Are they in cash, are they similar to cash, or are they in other coins that are similar to cash or whatever?”