Japan to Revoke Ban on Foreign Stablecoins in 2023: Report

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• Japan will lift the ban on the domestic use of foreign stablecoins in 2023.
• The new law will see the body in charge of stablecoins in Japan become distributors, i.e., the cryptocurrency exchanges in the country.
• Foreign stablecoin transfers will be limited to $7,500 per transaction.
• Japan is now more relaxed about cryptocurrencies and has attracted international cryptocurrency exchanges to operate there.

Japanese regulators are considering changing the existing embargo on stablecoins. According to a report from a local news organization report, the Financial Services Agency of Japan will lift the ban on the domestic use of foreign stablecoins in 2023.

As reported, the changes are embedded in the new “Revised Payment Services Act.” In the proposed act, there will be a return of foreign stablecoin but in a different dimension.

The ban on stablecoins in Japan empowered registered banks and mobile money agents to issue stablecoins.

The new law will see the body in charge of stablecoins in Japan become distributors. This means taking away the control of foreign stablecoins from their issuer and putting local distributors in charge. Local distributors in this context refer to cryptocurrency exchanges in the country.

Also, the changes will keep the transfer of foreign stablecoins to a maximum of $7,500 for every transaction. Despite moves to uplift the ban, the use of stablecoin will still fall under Anti-Money Laundering and Financing Terrorism control. Feedback is already coming to the FSA regarding public opinion on the proposal to uplift the stablecoin ban in Japan.

Before the proposed changes, cryptocurrency enthusiasts in Japan didn’t have access to stablecoins through any of the 31 exchanges.

Relaxed Approach Towards Cryptocurrency

Japan is now broadly more relaxed toward the use of cryptocurrency. Due to that, we’ve witnessed direct guidelines for cryptocurrency exchanges to list virtual tokens in the country.

The relaxed approach attracted international cryptocurrency exchanges to venture into the country and carry out their operations. Recently, Binance, the world’s largest cryptocurrency exchange by trading volume, acquired a local exchange licensed by the Japanese government.

In another positive development, the ruling party of Japan, through its tax committee, recently stopped cryptocurrency organizations from paying taxes on paper gains from issued tokens.

On the Flipside

• However, there is no information available about which stablecoins will return to Japan. Further, the stablecoin issuer must provide collateral assets as security.

Why You Should Care

• Recall that in June, following the crash of UST, the Japanese parliament banned the issuance of stablecoin by non-banking organizations. The recent uplift of the ban is one of the promises of the FSA to design a clear-cut regulation for the use of the stablecoin in Japan.
• The recent news can be a source of excitement for some crypto enthusiasts, given the popularity of stablecoins. Unlike cryptocurrencies like Bitcoin, whose prices fluctuate dramatically, stablecoins are seen as ideal safe-haven assets.

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