- Japan became one of the first large countries in the world to prepare a legal framework for stablecoins.
- Stablecoins backed by Japan’s fiat Yen or any other legal tender to allow holders to employ it at face value.
- Japanese Financial Services Agency could reverse the ban on circulation of stablecoins like USDT Tether and USDC.
The Japanese government approved a bill that recognizes stablecoins as digital money. The country has become one of the first in the world to establish a legal framework for stablecoins. The bill did not comment on stablecoins backed by cryptocurrencies and assets like Tether.
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Japan to lift ban on stablecoins like USDT Tether and USDC in 2023
Japan is set to lift the ban on stablecoins according to a recent development by the Japanese Financial Services Agency. The FSA is keen on reversing a ban on domestic distribution of stablecoins issued overseas, in 2023. The report highlights that the remittance limit will be set at 1 million yen, approximately $7,500 per transaction.
Exchanges in Japan that wish to list cryptocurrencies get them evaluated by the Japan Virtual and Crypto assets Exchange Association [JVCEA]. About 50 cryptocurrencies have been cleared for trade in Japan. Exchanges will be allowed to list new tokens within 30 days of presenting their listing plan to the JVCEA.
The wait time will be shortened to two weeks starting April 2023. Genki Oda, Vice Chairman of the JVCEA told Bloomberg,
We hope the latest measure will help revitalize Japan’s crypto assets market.
The pre-screening process could be eliminated entirely by March 2024.
Japan’s move could make it a crypto hub
The Japanese Financial Services Agency could therefore reverse the ban on stablecoins like Tether (USDT) and USD Circle (USDC). For domestically issued stablecoins, issuers will have to put together collateral assets. Banks, fund transfer service providers and trust companies can issue stablecoins backed by the Japanese Yen or other fiat currencies.
The FSA will mandate stablecoin distributors to record information as an anti-money laundering measure. Japan recently expressed a keen interest in expanding into the NFT and metaverse space. The government is looking at easing crypto tax rules to embrace digital assets and their use in the economy.