Japan is on the brink of launching its first blockchain-based yen-pegged stablecoin, an initiative set to gain momentum as the Bank of Japan (BOJ) is expected to raise interest rates in the coming months. The Financial Services Agency (FSA) is likely to approve the new stablecoin, which will trade at a 1:1 ratio with the yen, spearheaded by Tokyo-based fintech firm JPYC. This introduction comes amid rising Japanese government bond yields and a strengthening yen, which could boost the attractiveness of yen-backed assets. Analysts predict that the BOJ may implement a rate hike between October and December, as inflation remains robust, with expectations of a potential 25 basis point increase. The yen's appeal is further enhanced by narrowing yield differentials between U.S. and Japanese bonds, impacting cryptocurrency markets such as BTC/JPY, which has recently experienced an 8% drop, indicating increased volatility. As the interest rate landscape shifts, stablecoins are once again positioned as favored options for capital transfers, reflecting a trend observed during the U.S. Federal Reserve's previous rate hikes.

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