Under the proposed act, foreign stablecoins will be allowed to return to Japan, but with certain restrictions in place.
The body in charge of stablecoins in Japan will become distributors, meaning that control of foreign stablecoins will be transferred from the issuer to local distributors, i.e. cryptocurrency exchanges in the country. Additionally, the transfer of foreign stablecoins will be limited to $7,500 per transaction.
Japan's Relaxed Approach to Cryptocurrency Attracts International Exchanges
Japan has recently taken a more relaxed approach to the use of cryptocurrency, issuing direct guidelines for cryptocurrency exchanges to list virtual tokens in the country.
This has attracted international exchanges to the market, such as Binance, the world's largest cryptocurrency exchange by trading volume, which recently acquired a local exchange licensed by the Japanese government. Additionally, the ruling party of Japan recently stopped cryptocurrency organizations from paying taxes on paper gains from issued tokens.
Stablecoin Use in Japan Still Subject to Anti-Money Laundering and Financing Terrorism Controls
Despite the lifting of the ban on foreign stablecoins in Japan, the use of stablecoins will still be subject to Anti-Money Laundering (AML) and Financing Terrorism (FT) controls. There is currently no information available about which specific stablecoins will be allowed to return to Japan under the new regulations. The stablecoin issuer will also be required to provide collateral assets as security.
Why the Uplift of the Ban on Foreign Stablecoins in Japan Matters
The recent announcement that the FSA of Japan will lift the ban on the domestic use of foreign stablecoins in 2023 is significant for several reasons. Firstly, it marks a change in the approach of Japanese regulators towards stablecoins, which were previously banned following the crash of UST in June. Secondly, the new "Revised Payment Services Act" will provide a clear-cut regulation for the use of stablecoins in Japan, which may encourage wider adoption of these assets.
Stablecoins, which are digital assets designed to maintain a stable value, are often seen as safer alternatives to cryptocurrencies like Bitcoin, whose prices can fluctuate dramatically. As such, the uplift of the ban on stablecoins in Japan may be seen as a positive development for crypto enthusiasts.