Japan Enacts New Stablecoin Regulations
A local financial body in Japan has said that the country’s new legislation that will allow investors to trade stablecoins like Tether (USDT) is scheduled to be approved by June 2023 at the latest.
The Financial Services Agency (FSA) in Japan is working to remove the restriction on the domestic distribution of stablecoins and has tentative plans to make this change before the end of the year for some stablecoins.
The FSA spokesperson noted that the organization will only approve stablecoins that successfully pass individual inspections designed to ensure that such cryptocurrencies are protected from a user protection perspective.
The representative went on to say that other examples include international issuers in their own countries that are subject to identical restrictions in Japan, where underlying assets are adequately secured.
In addition, the authorities emphasized that there is no way of knowing whether major stablecoins such as Tether (USDT) or USD Coin (USDC) would be allowed. This point was emphasized several times. According to the spokesman, the FSA does not provide any opportunity to obtain such material before the decision has been made.
The new stablecoin laws that have been proposed for Japan are included in the proposed Cabinet Orders and Cabinet Office Ordinances related to the 2022 amendment to the Payment Services Act.
The new regulations will be implemented in December 2022, and its primary objective is to set standards for electronic payment instruments and create the registration processes associated with them.
The official data indicates that the FSA will continue to take public views on the changes to the Payment Services Act until 31 January 2023. An FSA spokeswoman said the specific date has not yet been agreed as the regulation is planned to be published and implemented via the relevant processes when the public the comment period has expired.
The FSA said the deadline for enforcement is going to be early June.
According to previous reports, the Diet of Japan has approved a measure that will take effect in June 2022 and ban the use of foreign stablecoins. The bill also requires stablecoin issuers to peg their cryptocurrencies exclusively to the Japanese yen or another legal tender.
It appears that a number of cryptocurrency companies have been adversely affected by the new regulations, as none of the 31 Japanese exchanges registered with the FSA have subsequently provided stablecoin operations. The law is scheduled to enter into force in 2023.
Due to the weak state of the cryptocurrency market in Japan, a number of prominent cryptocurrency exchanges, including Coinbase and Kraken, have recently suspended operations there.
