Japan’s Proposed Stablecoin Rules ‘In Line with International Developments’

In a note, cryptocurrency liquidity provider B2C2, which has significant operations in Japan, said this move was expected but the long term implications aren’t clear.

article-image

Japan Financial Services Agency; Source: Shutterstock

share

key takeaways

  • Japan’s Financial Services Agency move to restrict stablecoin issuance to financial institutions, similar to what US regulators have proposed, was an expected move according to stakeholders
  • In a note, B2C2’s Director of Strategy Joerg Schmidt said that the long-term implications aren’t quite clear, but they aren’t going to be significant given the relatively small market for Yen-denominated stablecoins

The latest move in Japan to restrict stablecoin issuance to financial institutions, which will be implemented soon, according to reports, won’t have a large immediate impact on the local digital assets market, but it’s still unclear according to a note from crypto liquidity provider B2C2. 

B2C2’s Tokyo-based Joerg Schmidt, its Director of Strategy, wrote in a note sent to Blockworks that the move was in line with international developments. Schmidt explained that the Japanese regulator has initially allowed stablecoin issuers to use various ways to structure stablecoins: cryptoassets (JPY-Zen), prepaid payment instruments (JPY-C), and money orders.

“It seems that the FSA is now of the opinion that money orders are the most suitable way to structure stablecoins. Issuers of such stablecoins would need to register as a money transmitter or be licensed as a bank,” Schmidt wrote, also saying that the implications on the market were unclear. 

“As banking regulations were not drafted with stablecoins in mind, they do not fit properly and come with their own problems. It is therefore well possible that the regulations will be updated at some point in the not-so-distant future,” he continued. 

But the question is, does any of this really matter? On BitFlyer and CoinCheck, two large exchanges in Japan, Yen-denominated stablecoins aren’t actively traded in notable volume. In fact, stablecoins aren’t really actively traded at all in Japan. 

It’s likely that, similar to Korea, stablecoins just aren’t really popular in Japan because fiat transfers are so cheap and traders were already wary about the regulatory environment surrounding them. 

“There are very few JPY-backed stablecoins so that the immediate impact will be relatively small. In the long term, innovation will potentially be much slower and more costly,” Schmidt wrote in the note. 

Recently, politicians in Japan said that the Bank of Japan should “speed up” the development of a CBDC because it’s a matter of “economic security” to the nation.


Get the day’s top crypto news and insights delivered to your inbox every evening. Subscribe to Blockworks’ free newsletter now.


Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Top Icon.png

Research

Osmosis thrived in H2 2023 on the back of increased DeFi activity deriving from recently launched Cosmos-related projects and better market conditions. With new value accrual mechanisms for the native token, Osmosis is well-positioned to continue its strong performance in 2024.

/

article-image

Though the opposing flow trend is likely to slow over time, industry watchers note, bitcoin fund assets could one day eclipse the $90 billion gold ETF space

article-image

Celestia had the first mover advantage. EigenDA has staked ether. What sets Avail apart?

article-image

Bitcoin moved 1% higher Monday morning in New York, Matrixport analysts say $62,000 could happen next month

article-image

It’s hard to believe right now that crypto — even with all of its flexibility and massive capabilities — could ever be like cash on the internet

article-image

Michael Saylor announced Monday morning that MicroStrategy bought 3k more bitcoin after the X account was compromised over the weekend

article-image

Plus, Pudgy Penguins grows its brand and a group of Autoglyphs sell for $14.5 million