With this initiative, the Metropolitan Government of Tokyo seeks to establish a healthy market for stablecoins, which are expected to serve as a new payment infrastructure and promote the establishment of a digital yen-based economy.
Key Takeaways:
- Tokyo launched 40M yen subsidies for stablecoins, aiming to build a future digital economic zone.
- After a 1st October launch, Japan expects local yen tokens to dominate future global payments next.
- Japanese yen stablecoins have regulatory advantages over their USD counterparts.
Tokyo Offers Subsidies For Companies Implementing Digital Yen-Based Use Cases
While dollar-based stablecoins dominate the market in capitalization and relevance, initiatives including other stablecoins are starting to surge.
The Metropolitan Government of Tokyo has launched a subsidy program extending subsidies to companies that use yen-based stablecoins as part of their business model.
According to the city’s Bureau of Industrial and Labor Affairs, the city will subsidize “initiatives that create use cases by utilizing actually issued SCs, in compliance with the Payment Services Act and other relevant laws and regulations, and that, in principle, can be implemented or verified by the end of the fiscal year in which the grant decision is made.”
The subsidy, which can reach up to 40 million yen (nearly $250K), can be used by companies to pay for different expenses. These include the costs of using external infrastructure to process digital yen payments, expenses incurred in connection with consultations with experts and audits, and system development costs.
The government specified that, with this subsidy program, it seeks to “solve social problems faced by Tokyo residents or businesses within Tokyo, improve the convenience of payments and remittances, and promote the construction of a yen-based digital economic zone through the spread of yen-denominated shopping centers.”
Japanese yen stablecoin initiatives were slow to start, as Japan established one of the most restrictive stablecoin regulations internationally, with the first yen-pegged stablecoin launching in October.
Even so, the government of Tokyo trusts that these will become “major means of payment in the international community,” supporting the social implementation of these via the discussed subsidies.
The advantage of these national initiatives lies in the limited penetration of their dollar-based counterparts in Japan, as current regulations impose the same user protection and AML standards on both international and national stablecoin issuers.
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