By
Benjamin Njiri
April 23rd, 2024
Expectations are that the new rule must have been completed by midyear and adopted by that same time.
The Financial Services Agency (FSA) of Japan has begun working on a new stablecoin regulation for the country. This follows after it earlier placed an outright ban on the use and distribution of stablecoins in 2022. At the time, Japan mandated all stablecoin issuers to link such cryptocurrencies to the Japanese yen or another legal tender. Now, however, the country is set to review those terms and modify them to allow residents to resume trading stablecoins.
According to the FSA, it is presently seeking public opinion on the proposed rule changes and will keep accepting such opinions up until January 31. But, ultimately, expectations are that the new rule must have been completed by midyear and adopted by that same time.
FSA of Japan Issues Criteria for Eligibility
Per the financial authority, some stablecoins may still remain banned even after the new rule is adopted. But all stablecoins will be subjected to thorough checks. Eventually, only those that satisfy the required criteria for adoption will be allowed. According to an FSA spokesperson, the body will seek to allow only those stablecoins it perceives to be safe, especially in line with investor protection. This means that even foreign issuers that wish to operate in Japan will be scrutinized in the same manner.
Meanwhile, it remains unknown whether popular stablecoins such as Tether (USDT) and the Circle-issued USDC will eventually make the cut. The spokesperson declined from giving any such hints, saying:
“FSA does not provide any opportunity to access such information before the decision is made.”
Is Japan Looking to Boost the Crypto Market?
It appears that Japan’s decision to revisit its previous stablecoin stance might be to bolster the country’s crypto economy. Since parliament passed the bill last June, the rule has had a major impact on the operations of most crypto firms.
To put that into perspective, none of the 31 FSA-registered Japanese exchanges has been able to offer any stablecoin-related services ever since. In fact, some top crypto exchanges like Kraken and Coinbase have had to pull out of the region. As expected, their reasons border around the restrictions and a seemingly weak crypto market.