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Key Takeaways:
- Japan’s FSA might end the prohibition on the circulation of foreign-issued stablecoins.
- To prevent money laundering, distributors are required to record transaction information.
The 31 cryptocurrency exchanges listed with the Financial Services Agency of Japan do not yet provide trading in stablecoins like USDT or USDC. Japanese officials are reviewing several crucial cryptocurrency regulations relating to the usage of stablecoins like Tether USDT or USD Coin.
According to the local news agency Nikkei, Japan’s Financial Services Agency (FSA) will end the prohibition on the domestic circulation of stablecoins produced outside in 2023.
According to the new stablecoin laws in Japan, local exchanges will be authorized to conduct stablecoin trade as long as assets are preserved through deposits and there is a maximum remittance amount. However, the study issues a warning that the growth of stablecoin payment may result in faster and more affordable international remittances.
According to the FSA, expanding anti-money laundering regulations is necessary to allow stablecoin distribution in Japan. Distributors of stablecoins are expected to be required to keep track of transaction details, including names, as a countermeasure against money laundering. In addition, the government started soliciting feedback on 26th December regarding suggestions for loosening the stablecoin limit in Japan. As was previously mentioned, in June 2022, the Japanese parliament enacted a measure that forbade stablecoin issuance by non-banking businesses.
The most recent regulation will significantly impact the cryptocurrency trading services offered in Japan because there are currently no local exchanges enabling trading in stablecoins like USDT or USDC. As of November 30, 2022, none of the 31 Japanese exchanges registered with the FSA, including businesses like BitFlyer and Coincheck, handled stablecoin trading, according to official figures.
Recently, the Japanese government has put a lot of effort into developing legislation about cryptocurrencies. A proposal that would have excused cryptocurrency companies from paying taxes on tokens issued for paper gains was approved by the tax committee of Japan’s ruling Liberal Democratic Party on December 15. The use of algorithmic stablecoins like TerraUSD has previously been discouraged by local authorities (UST).
The party in charge of stablecoins in Japan will automatically be the distributor if the restriction on stablecoins issued by foreign governments is repealed. According to the report, distributors rather than foreign issuers would manage the tokens to preserve their value.
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