In June, Japan became one of the first major countries to develop a legal framework for stablecoins. Six months later, the Financial Services Agency (FSA) aims to lift the restriction on foreign-issued stablecoins, This is an important step in changing the current ban.
In 2023, Japan’s Financial Services Agency is likely to lift the limitation on the domestic distribution of stablecoins issued worldwide. According to Coinpost, new crypto restrictions based on the most recent ‘Revised Payment Services Act’ will apply soon.
If the limits on foreign-issued stablecoins are revoked, the party responsible for stablecoins in Japan will immediately become the distributor. To secure the tokens’ value, distributors will handle them rather than foreign issuers, as stated in the report.
The FSA has suggested limiting transfers for such stablecoins to 1 million yen (about $7,500 per payment). Which stablecoins will return to Japan is unknown. The Circle-issued USDC, based in the United States, might be one of the stablecoins to enter Japan. Tether (USDT), the largest stablecoin, might also take part.
However, In the case of locally created stablecoins, the issuer will be required to arrange assets as security. Furthermore, the Japanese stablecoin market allows only banks, fund transfer service providers, and trust firms to be issuers.
Moreover, as part of anti-money laundering (AML) procedures, the FSA will require stablecoin distributors to record payment data such as user names. In addition, the financial authority intends to begin gathering input on proposals for its draft rules on stablecoins.
Stablecoins Are Seen As Digital Money In Japan
Per the Bloomberg Jun 2, 2022 report, the Japanese government has set new guidelines on stablecoins. The assets were given legal validity by lawmakers, who accepted them as digital money. Stablecoins, on the other hand, must be tied to the country’s national currency (the yen) or another legal tender in order to be classified as such.
The Financial Services Agency of Japan stated that the laws would go into place in a year. Similarly, stablecoin issuers will be subject to government monitoring in the coming months.
Related Reading | Bitcoin Hash Rate Down By 40% Due To Energy System’s Stress Days
The recent crash of Terra may have caused the need for new laws in the area. The failure caused fear in the crypto business, and many buyers lost large sums.
The Japanese regulator issued a document in December outlining its plans to limit the algorithmic support of stablecoins. As per Japan’s Vice Minister for International Affairs, Tomoko Amaya, the FSA posted ideas that address the stance on algorithmic stablecoins for the first time.
The lax attitude inspired international cryptocurrency exchanges to open offices in the country and carry out their business. Binance, the world’s largest cryptocurrency exchange by trading volume, just purchased a Japanese-licensed local exchange.