Japan Ruling Party Urges Expansion of Yen Stablecoin Use for Asian Payments

A policy panel within Japan's ruling Liberal Democratic Party has urged the government to expand the use of yen-backed stablecoins and establish rules for cryptocurrency exchange-traded funds.

The proposal, submitted by the LDP's blockchain promotion panel, aims to strengthen yen-based digital payment infrastructure as dollar-backed stablecoins spread. This move is in line with Japan's goal to promote the use of yen stablecoins for payments across Asia.

The panel's proposal argues that crypto ETFs could offer investors an investment product that is easy to understand and position them as formal investment instruments in financial markets.

Japan's Financial Services Agency has been supporting domestic financial institutions as they use blockchain technology to improve operations and efficiency. Japanese startup JPYC began issuing a yen-linked stablecoin in October 2025, while Japan's three largest banks have also announced an experiment to jointly issue stablecoins with the agency's support.

According to Reuters, dollar-pegged stablecoins have grown with strong backing from President Donald Trump, but policymakers have warned that stablecoins could move funds outside the regulated banking system and weaken the role of commercial banks in global payment flows.