Japan set to ease restrictions on the use of foreign-issued stablecoins
(Kitco News) - Stablecoins became a focal point for regulators in 2022 as their systemically important role in helping the crypto market function became apparent following the collapse of Terra/Luna in May.
After many countries moved to ban or significantly restrict the use of popular stablecoins backed by the U.S. dollar – such as Tether (USDT) and USD Coin (USDC) – Japan has become one of the first to reevaluate the restrictions it placed on the use of dollar-backed stablecoins by crypto investors who reside in Japan.
According to a report by the Japanese news agency Nikkei, the country’s Financial Services
Agency (FSA) is planning to relax its ban on the domestic circulation of foreign-issued stablecoins in 2023. Currently, no exchanges registered in the country offer trading in stablecoins like USDC or USDT.
Under the new regulations, Japan will allow local exchanges to facilitate stablecoin trades for the purposes of asset preservation through deposits and a maximum remittance amount. Local distributors will be tasked with handling payments-focused stablecoins if they maintain sufficient assets.
The report suggested that overseas remittances could become faster and less expensive if the use of stablecoins spreads.
For stablecoins issued in Japan, the new regulations stipulate that issuers must prepare guaranteed value-added assets and that issuers are limited to regulated entities like banks, registered transfer agents and trust firms.
The FSA opened public polling on the new guidelines on Dec. 26. According to the FSA, allowing stablecoin distribution in the country will require additional laws regarding Anti-Money Laundering controls.
Since no exchanges currently offer the ability to trade the two most popular stablecoins, the new regulations are expected to have a significant influence on the trading services available within the country.
Included in the new guidelines is a proposed maximum amount of remittances for foreign stablecoins of 1 million yen or $7,500 per transaction.
This development comes as Japanese authorities have been aggressively developing crypto-related regulations in recent months. On Dec. 15, the tax committee of Japan’s ruling party, the Liberal Democratic Party, accepted a proposal to exempt crypto businesses from paying taxes on paper gains issued tokens.
The country has also reaffirmed its intention to continue exploring the creation of its own central bank digital currency, the digital yen. The next phase of the Bank of Japan’s investigation will involve a collaboration with three megabanks and regional banks in the country to conduct a CBDC issuance pilot aimed at providing demo experiments for the issuance of a digital yen beginning in spring 2023.
Other policy proposals include legislation that governs decentralized autonomous organizations (DAO), governance reforms for the Japan Virtual Currency Exchange Association, and auditing guidelines for crypto companies.
Regulators in the country are also promoting a long-term cooperation agreement with crypto miners in Japan. An agreement between Japanese utility Tokyo Electric Support (TEPCO) and equipment maker TRIPLE-1 plans to utilize extra grid electricity to power cryptocurrency mining.