With Japan set to lift its stablecoin ban, crypto enthusiasts can expect this in 2023
- The Financial Services Agency is expected to reportedly lift its ban on foreign issued stablecoins in 2023
- These stablecoins will be managed by local distributors who will have to ensure consumer protection and comply with AML laws
The top financial regulator of Japan indicated that 2023 could see some positive changes with regard to major stablecoins. These include Tether USD (USDT), USD Coin (USDC) etc.
According to Japanese local media, the Financial Services Agency is set to lift its controversial ban on domestic distribution of stablecoins issued overseas in 2023.
Revised payment services act
As per a report by Coinpost, the Financial Services Agency made the decision after revising Cabinet Office ordinances. Furthermore, the agency further plans to establish appropriate guidelines which stands in line with the latest Revised Payment Services Act. The FSA also conducted a review of stablecoins and their potential impact on Japan’s financial system.
The financial regulator stated that in the interest of consumer protection, stablecoins issued overseas will be supervised by local distributors rather than their foreign issuers. Additionally, these distributors will protect the stablecoin’s value. Sufficient reserves would be maintained and a limit of 1 million Yen per transaction would be enforced for the remittances facilitated by these stablecoins.
As an anti-money laundering measure, stablecoin distributors will be required to disclose certain information to the FSA. Furthermore, these would include the names related to the transactions.
Locally issued stablecoins
As far as stablecoins issued within Japan are concerned, the issuers will be required to prepare collateral assets. Issuers are limited to banks, fund transfer service providers, and trust companies.
The FSA’s decision to lift the ban on foreign-issued stablecoins could be considered as a significant development for the cryptocurrency industry in Japan. It will allow domestic investors to access a wider range of stablecoins, including popular ones such as Tether and USDC.
This is expected to increase competition in the stablecoin market, potentially leading to lower fees for consumers. Additionally, Japan passed a landmark legislation on stablecoins in June 2022, providing a regulatory framework for the use of these digital assets in the country.
