New crypto regulation in Japan will allow stablecoins

Last Updated on 17 mins by John Piper

Japan’s new cryptocurrency regulations will allow investors to trade stablecoins. The legislation is expected to take effect as soon as June 2023.

Local news media reports that the Financial Services Agency of Japan (FSA), is currently working to lift the ban on domestic trading in stablecoins. Investors and traders will be able trade, buy, and sell certain stablecoins starting June 2023. FSA stated that this does not mean that all stablecoins from abroad will be allowed without restriction or regulation. Instead, only stablecoins that meet certain criteria will be available to trade.

The FSA states that public comments on amendments to Payments Service Act (which includes cryptocurrency and stablecoin regulation) will be accepted up to 31 January 2023.

The FSA states that the limits are in place to protect investors from falling for scams or rug-pull schemes. To ensure investors’ safety, there will be checks to make sure the stability of their funds. This will include regulation in the foreign currency underpinning the stablecoin. For example, Tether is pegged to the US dollar. The new regulations do not provide any information or guarantee that leading stablecoins such as Tether ($USDC) and USD Coin ($USDC), will be allowed in Japan.

Japan’s new stablecoin regulations

These new regulations are part of the Cabinet Orders on Adjustments to the Payment Services Act 2022. The new legislation proposed will create the legal infrastructure to digital currencies and the protocols necessary to use them as both a payment system and investment option.

The Japanese government banned the trading and use of foreign stablecoins in 2022. This law required that crypto exchanges and trading platforms allow trade and purchase of stablecoins only pegged to the Japanese currency.

Coin Insider’s first article was “New Japanese crypto regulation will allow stablecoins”

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