AsianFin -- Japan is edging closer to launching its first yen-backed stablecoin just as the Bank of Japan (BOJ) is expected to raise interest rates, a move that could boost demand for yen-denominated assets.

The Financial Services Agency (FSA) is likely to approve a yen stablecoin as soon as this fall, CoinDesk reported earlier this month. Tokyo-based fintech JPYC plans to register as a money transfer business and lead the rollout of the digital token, which will maintain a 1:1 peg with the Japanese yen.

The development comes at a pivotal time. A BOJ rate hike would strengthen the yen, making both the currency and its blockchain-based equivalent more attractive to investors and institutions seeking stability in a volatile crypto landscape.

Stablecoins, which are pegged to fiat currencies like the dollar, euro, or yen, are increasingly being used for trading, remittances, and cross-border payments, offering a more predictable alternative to traditional cryptocurrencies.