Japanese regulators may lift ban on stablecoin forex: report

Japan became one of the first major countries to establish a legal framework for stable currencies in June. Six months later, it takes another crucial step to adjust the existing ban as the Financial Services Agency (FSA) wants to lift the ban on cryptocurrency stablecoins.

It is still not clear what tokens will be made available. However, USDC and Tethers USDT backed by Circle and Coinbase are expected to make a comeback. According to a report by local news agency Nikkei, the new stablecoin regulation is likely to be implemented in 2023.

Japan loosens stable currencies

Under the new rules, distributors will be tasked with dealing with stablecoins rather than foreign issuers to protect their value. Digital asset exchanges in the country will be able to handle stablecoin trading provided assets are maintained through deposits and a cap on transfers.

The Financial Services Authority (FSA) has proposed the maximum transfer amount for these stablecoins to be limited to 1 million yen (or $7,500 per transaction).

For locally minted stablecoins, on the other hand, the issuer will be required to provide the assets as collateral. In addition, only banks, money transfer service providers and credit companies can be issuers in the Japanese stablecoin market.

The Financial Services Authority will require stablecoin distributors to register transaction details such as usernames as part of its anti-money laundering (AML) measures. The financial regulator also plans to start collecting feedback on proposals for draft guidelines for stablecoins.

List of stablecoins

Stablecoins have been on the radar of regulators for a few years now. Silent power players in the crypto space have been studied and investigated for their systemic risks to the ecosystem. This summer, the Japanese parliament passed a bill to ban the issuance of stablecoins by non-bank institutions, stating that issuance will be limited to licensed banks, registered money transfer agents and trust companies in Japan.

The bill was introduced after the crash of TerraUSD sparked liquidity issues across the market. Despite this, the FSA did not mention algorithmic stablecoins in what was considered landmark legislation.

In December, the Japanese regulator published a document highlighting its plans to reduce computational support for stablecoins. According to Japan’s Deputy Minister of International Affairs, Tomoko Amaya, recommendations have been made by the Financial Services Authority (FSA) seeking to address algorithmic stablecoin approaches for the first time.

The proposed revision states that “global stablecoins may not use algorithms to lock in value” and strengthens protections for redemption rights.

Japanese Regulators Might Reverse Ban on Foreign Stablecoins: The Report appeared first on CryptoPotato.

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