- Japan’s FSA will only allow stablecoins that successfully pass individual checks ensuring that they provide user protection
- None of the 31 Japanese exchanges registered with the FSA handle stablecoin trading
In Japan, the Financial Services Agency (FSA) is set to adopt regulations allowing investors to trade using stablecoins like Tether (USDT) in June 2023. The new regulations are part of the revised Payment Services Act which will come into effect later this year.
The legal revision primarily introduces a registration system for stablecoins circulation and reinforces anti-money laundering measures. The latest development comes a month after reports that Japan will end the prohibition against using foreign stablecoins domestically in 2023.
The Japanese regulatory body believes that If payment using stablecoins spreads, international remittances may become faster and cheaper. FSA spokesperson has stated that FSA will allow only stablecoins that successfully pass individual checks ensuring that such crypto are safe and also ensure user protection.
Citing examples, the FSA representative noted that it includes foreign issuers in their own countries being subject to equivalent regulations in Japan, with underlying assets being preserved appropriately, the FSA representative noted. There requires more clarity on whether leading popular stablecoins like Tether and USD Coin will be allowed.
The FSA also will be accepting public comments regarding the Payment Services Act changes until Jan. 31, 2023. The latest development is expected to impact cryptocurrency trading services offered in Japan as currently, no local exchanges provide trading in stablecoins like USDT or USDC. As per reports, none of the 31 Japanese exchanges registered with the FSA — including firms like BitFlyer or Coincheck — are handling trading in stablecoins.
Recently leading crypto exchanges Coinbase and Kraken stopped offering services in Japan, citing volatile market conditions coupled with a weak crypto market globally. Japan hasn’t always had a crypto-friendly stance. In June 2022, Japan’s parliament passed a bill to ban stablecoin issuance by non-banking institutions.
Now the country is working on crypto-related regulations. Last month, Japan’s ruling party, the Liberal Democratic Party’s tax committee, approved a proposal removing the requirement for crypto firms to pay taxes on paper gains issued tokens.