New Rules In Japan Allows Investors To Use Stablecoins, Applicable At The End Of 2023

JAKARTA - A new regulation in Japan that allows investors to trade using stablecoins such as Tether (USDT) is expected to be adopted no later than June 2023. This was revealed by local financial authorities recently.

Japan's Financial Services Agency (FSA) is working to lift the ban on stablecoin domestic distribution, planning to allow certain stablecoins later this year.

"This does not mean that all so-called'stablecoins' foreign products will be allowed without any restrictions," a spokesman for the Japanese FSA said in a statement to Cointelegraph.

According to representatives of the FSA, they will only allow stablecoins that successfully pass individual inspections to ensure that the cryptocurrency is safe from the point of view of user protection. Examples include foreign issuers in Japan subject to equivalent regulations in Japan, with basic assets maintained appropriately.

Authorities also stressed that there is no chance to know whether a large stablecoin like the Tether USDT or USD Coin will be allowed. "The FSA did not provide an opportunity to access the information before a decision was made," the representative said.

Japan's new stablecoin regulations are part of a proposed cabinet order and cabinet office regulation on amendments to the 2022 Payment Service Act. Introduced in December 2022, the new rules aim to establish requirements for electronic payment instruments and develop related registration procedures.

According to official data, FSA will receive public opinion regarding changes to the Payment Service Act until January 31, 2023.

"This is scheduled to be announced and enforced through necessary procedures after the closure of public opinion, therefore, the exact date has not yet been decided," an FSA spokesman said. The FSA noted that the deadline for law enforcement was set in early June.

As previously reported, Japan's parliament passed legislation to ban foreign stablecoins by June 2022, requiring stablecoin publishers to link such cryptocurrencies to simply Japanese yen or other legal tenders.

The new law, which is expected to take effect in 2023, appears to have an impact on many crypto companies as none of the 31 FSA-listed Japanese exchanges offer stablecoin operations. Several major crypto exchanges, including Coinbase and Kraken, recently withdrew operations in Japan, citing the weak crypto market.