A retail-focused digital corporate bond that pays interest and principal in a yen-linked stablecoin has emerged in Japan.

CoinPost reported on Sunday that Startale Japan will offer the first tranche of secured digital corporate bonds. The structure pays interest and redemption at maturity in JPYSC, a yen-linked trust stablecoin. The company described it as a first in Japan.

The bond carries a fixed annual coupon of 5.0 percent before tax, with a minimum subscription amount of 100,000 yen (about 851,250 won). It has a 1-year maturity, and the offering size is 99,900,000 yen (about 850,400,000 won). Subscriptions run from Sunday through Nov. 10. The issue date is Dec. 1, and interest will be paid twice on June 1, 2027 and Dec. 1, 2027. Redemption at maturity will also take place on Dec. 1. Investors subscribe in yen and receive interest and principal in JPYSC through the Startale app.

Parent company Startale Group guarantees payment of principal, interest and late-payment damages. It is not a publicly guaranteed product, and credit risk for the issuer and guarantor remains. Early redemption and third-party transfers are also not permitted in principle.

Startale Group Chief Executive Officer Sota Watanabe (와타나베 소타) said the purpose of the issuance is to create systems and use cases for on-chain finance in Japan, rather than simply to raise funds. Proceeds will be used for system development related to JPYSC, business development and marketing, and building an operating framework.

Startale sees stablecoins as a way to reduce the cost of paying interest on small-denomination bonds. It also plans to pursue a way to use smart contracts to automate interest payments more frequently than the current twice-yearly schedule.

The company aims to use this bond as a starting point to expand on-chain financial products to include tokenised money market funds (TMMF) and Japanese government bonds, and later equities. It also set a goal of enabling JPYSC holders to exchange directly from their wallets into yield-bearing assets such as short-term government bonds or TMMFs.