Japanese crypto exchanges may start the listing of popular stablecoins like Tether (USDT) or USD Coin (USDC) as early as June 2023.
Japan’s financial regulator has been working on allowing domestic distributors to handle stablecoins issued outside the country on the condition that they maintain sufficient collateral.
“This does not mean that all foreign products of so-called ‘stablecoins’ will be allowed without any restriction,” a spokesperson for Japan’s FSA said in a statement to Cointelegraph.
The new regulations are part of the revised Payment Services Act which will come into effect this year.
The legal revision primarily introduces a registration system for stablecoins circulation and reinforce anti-money laundering measures. Additionally, it enables overseas businesses to issue stablecoins in the country through custodians of digital assets.
Japan’s parliament passed a bill in June 2022 to regulate crypto tokens whose value is pegged to that of the yen, dollar or other currencies. The new law is aimed at curbing financial system risks of stablecoins and strengthen protections for investors.
Under the new law, stablecoins can be issued by licensed banks, registered money transfer agents and trust companies. Stablecoin licenses are expected to be issued only to highly credible businesses in charge of issuing and managing them, as well as intermediaries responsible for circulation.
The Japanese watchdog has repeatedly voiced doubts surrounding the anti-money laundering measures. As a result, none of the 31 Japanese crypto exchanges registered with the FSA list any stablecoins.
The news comes hot on the heels of cryptocurrency exchange Coinbase halting its trading services for Japanese residents.
Coinbase is finalizing its discussions with Japan’s Financial Services Agency (FSA) to ensure the safety and security of customer assets. The exchange teamed up with Mitsubishi UFJ Financial Group, which invested over 1 billion yen into Coinbase six years ago, in 2021 to launch a crypto exchange in Japan.
Rival exchange Kraken will also close down its operations in Japan in another sign of consolidation in the battered crypto industry following the collapse of FTX.
Kraken has decided to deregister from the Financial Services Agency (JFSA) as of January 31, 2023. Explaining the rationale behind its second exit, the company cited current market conditions in Japan in combination with a weak crypto market globally. As such, the resources needed to further grow their business in the country aren’t justified at this time.