USDC Makes History as Japan’s First Approved Dollar Pegged Stablecoin

In a significant milestone, USD Coin (USDC) has officially become the first dollar-pegged stablecoin approved for issuance in Japan. Circle CEO Jeremy Allaire announced the achievement on Tuesday, highlighting the stablecoin’s groundbreaking entry into the Japanese market through a partnership with crypto exchange SBI.

This development marks a pivotal moment for Circle, the company behind USDC, as it expands its global footprint and solidifies its position in the competitive stablecoin landscape. Allaire said USDC as “the first and only global dollar stablecoin” to gain regulatory approval for use in Japan. He also extended congratulations to SBI, the sole entity currently authorized to list and distribute USDC to Japanese investors.

SBI, a prominent player in Japan’s crypto ecosystem, outlined its plans to roll out USDC trading in the coming weeks. The exchange intends to initiate trading for a select group of users starting March 12, with a broader launch to follow as soon as logistical and regulatory preparations allow. With a current market cap of $56 billion, USDC remains a key contender among stablecoins, designed to maintain a consistent 1:1 peg with the U.S. dollar. Its market cap fluctuates based on the number of tokens held in circulation, reflecting its adoption and usage across various markets.

Japan’s Progressive Stablecoin Framework

Japan’s approval of USDC aligns with the country’s forward-thinking regulatory approach to digital assets. In June 2022, Japan passed a landmark stablecoin bill that officially recognized these tokens as a form of digital money. Enacted in 2023, the legislation mandates that stablecoins be tied to the yen or another legal tender, ensuring holders can redeem them at face value.

This framework also limits issuance to licensed banks, registered money transfer agents, and trust companies, establishing a robust structure for oversight. The Financial Services Agency (FSA) has indicated that additional regulations for stablecoin issuers will be introduced in the near future, further refining the landscape.

Circle has long praised Japan’s regulatory clarity. Dante Disparte, the company’s chief strategy officer and head of global policy, spoke to Decrypt in 2022 about the legislation’s significance. He described Japan’s law as a “standard-setting example of smart policy,” emphasizing its balanced approach to fostering innovation while protecting consumers. Disparte expressed hope that other nations would follow suit, adopting similar measures to support the growth of stablecoins worldwide. Japan’s embrace of USDC underscores the country’s commitment to integrating digital currencies into its financial system responsibly.

The timing of this announcement adds an intriguing layer to the broader stablecoin narrative. Just weeks ago, Coinbase CEO Brian Armstrong identified closing the gap with USDC’s primary competitor, Tether, as one of his company’s ambitious goals. Coinbase, which co-founded the Centre Consortium with Circle in 2018 to manage USDC’s issuance, deepened its involvement in 2023 by acquiring a minority stake in Circle and disbanding the consortium.

Despite these efforts, USDC faces a formidable challenge. Tether currently commands a $142 billion market cap, securing its position as the third-largest cryptocurrency asset, according to CoinGecko data. For USDC to rival Tether’s dominance, Circle and its partners will need to sustain momentum in markets like Japan while broadening adoption globally.