Financial regulators in Japan are considering removing suspensions on some of the most significant crypto assets in the country. Reports indicate that the government is seeking to allow some offshore stablecoins, like Tether’s USDT and Circle’s USDC operations, in Japan.
New Stablecoin Regulations On The Horizon
According to reports from a local news outlet, the Financial Services Agency (FSA) will suspend the ban on the local supply of foreign stablecoins in 2023.
Moreover, the new stablecoin guidelines will allow local crypto exchanges to facilitate stablecoin trading, subject to complying with asset preservation by deposits and a remittance limit. According to the official statement, if stablecoin transactions spike, international remittances would be faster and more affordable for many.
However, the FSA added that by allowing stablecoin distribution in the country, stringent anti-money laundering controls should be in place. As a result, as of December 26, the agency has started gathering public feedback on the purported suspension of foreign stablecoin use in Japan.
It is worth noting that in June 2022, the Japanese parliament passed legislation to ban the issuance of stablecoins by non-banking platforms in the country. Furthermore, because no exchange currently offers stablecoin trading in USDT and USDC, the most recent development will significantly increase the availability of crypto asset trading services in Japan.
The official data shows that not one of the 31 crypto exchanges approved by the FSA is offering stablecoin trading as of November 2022. Per Coingecko data, Japan’s leading digital asset exchange, BitFlyer, currently facilitates transactions in only five crypto tokens: BTC, ETH, BCH, XRP, and XLM.
Furthermore, authorities in Japan have been working on implementing further regulations for the crypto industry. The country’s ruling party tax committee recently okayed the proposal requiring crypto service providers to pay taxes from proceeds of paper-based issued tokens.
After the Terra Luna fiasco, local regulators approved the recommendations to suspend the use of algorithmic stablecoins like Terra UST.
Will Japan See Mass Crypto Adoption?
Following Japan’s move to relax its strict crypto rules and pave the way for more digital asset adoption, the country expects to see more use of cryptocurrency in the coming months.
Nevertheless, Japan’s often lengthy registration process has been cited by many as a deterrent to service providers. However, in October, Japan’s Prime Minister, Fumio Kishida, revealed that the government is keen to support the digital ecosystem by investing in local platforms to boost adoption.
Thus, Kishida noted that clearing the country’s long-held regulatory stance is ongoing, accompanied by a less stringent screening process for crypto exchanges. With a less strict registration process, Japan can accept more service providers and digital currencies to allow institutions to gain exposure to cryptocurrency through local exchanges.
Apart from this, Japan intends to make the country a crypto hub and invest in local service providers to rival Binance and other offshore exchanges.