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The Japanese digital asset ecosystem is gearing up for new changes, with the lifting of the ban on foreign stablecoins the most anticipated.
The Financial Services Agency (FSA) has announced that the asset class ban may be lifted in June 2023. The regulator confirmed that work is underway to enable domestic distribution of stablecoins in the country but added that there will be certain limitations.
“This does not mean that all foreign products called ‘stablecoins’ will be permitted without any restrictions,” said an FSA spokesperson. When asked whether Tether (USDT) or USD Coin (USDC) would be permitted in the country, a spokesperson for the FSA stated that the agency “did not provide any opportunity to access such information before a decision was made.”
The watchdog revealed that the stablecoins to be listed on the Japanese exchange are those that meet the agency’s requirements. Japan’s FSA has said it is interested in stablecoins that are properly backed and whose reserves are backed by liquid assets.
Stablecoins that are subject to the same strict regulations in their foreign jurisdictions, such as Japan, have a higher chance of being approved by the FSA. Under the new rules, exchanges that are allowed to list foreign stablecoins will collect transaction details from users in addition to imposing a $7,500 remittance limit on each transaction.
Japanese authorities were confused by TerraUSD (UST)’s notorious de-pegging, and to prevent a repeat, they banned stablecoins that are not linked to the Japanese yen.
The FSA’s plan to lift the ban hinges on its ambition to increase international remittances, which local analysts say “may become faster and cheaper.” Public consultations to permit foreign stablecoins started in December and are expected to run until January 31.
New laws for payment services
Japanese regulators are working on amendments to the Payment Services Act designed to establish basic requirements for electronic payment instruments. The revision was spearheaded by a cabinet order, and regulations as a regulator aim to streamline the local and international payments space.
“It is scheduled to be announced and enforced through the necessary procedures following the closing of public comments,” said one insider.
Japan’s stock exchange regulator reflects on the government’s plans to liberalize the industry following plans to ease the asset listing process. The regulator’s plans are poised to eliminate tedious pre-screening requirements for local coins unless the token is new to the country’s virtual currency ecosystem.
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