• The Financial Services Agency of Japan will lift the ban on the domestic distribution of foreign-issued stablecoins in 2023.
• The new regulations will allow local exchanges to handle stablecoin trading under the condition of asset preservation by deposits and an upper limit of remittance.
• None of the 31 crypto exchanges registered with Japan’s Financial Services Agency are currently offering trading in stablecoins like USDT or USDC.
The Financial Services Agency (FSA) of Japan has announced plans to lift the ban on the domestic distribution of foreign-issued stablecoins in 2023. This move marks a significant shift for the country’s stance on cryptocurrency, and follows the passage of a bill earlier this year that prohibited non-banking institutions from issuing stablecoins.
The new regulations will allow local exchanges to handle stablecoin trading as long as they adhere to certain conditions. These conditions include asset preservation by deposits and an upper limit of remittance. The FSA is also requiring exchanges to strengthen their Anti-Money Laundering controls, as the use of stablecoins could potentially facilitate international money laundering.
Currently, none of the 31 Japanese exchanges registered with the FSA are offering trading in stablecoins like USDT or USDC. This includes major cryptocurrency exchanges such as BitFlyer and Coincheck. If the ban is lifted, though, it could open up a new revenue stream for these exchanges, as well as make international remittances faster and cheaper.
The FSA is currently collecting feedback on the proposed regulations, which are expected to be finalized by the end of 2023. Once the ban is lifted, it will be interesting to see how the Japanese cryptocurrency market responds.