Japan’s new regulations allowing investors to trade using stablecoins like Tether (USDT) are expected to be adopted by at least June 2023, according to local financial authorities.
Japan’s Financial Services Agency (FSA) is working to lift restrictions on domestic stablecoin distribution, planning to allow certain stablecoins later this year.
“This does not mean that all foreign products called ‘stablecoins’ will be allowed without restrictions,” a spokesperson for Japan’s FSA said in a statement to Cointelegraph.
The FSA will only allow stablecoins that successfully pass individual checks to ensure that the cryptocurrencies are safe from the point of view of user protection, an FSA representative said. Examples include companies that issue foreign securities in their home countries that are subject to the same regulations as Japan, with their underlying assets properly guarded, the spokesman said.
The authorities also emphasized that there is no way to know whether major stablecoins like Tether (USDT) or USD Coin (USDC) will be allowed. “The FSA did not give us the opportunity to access the information before a decision was made,” the representative said.
Japan’s new stablecoin regulations are part of the proposed cabinet order and cabinet office regulations on the amendment of the Payment Services Act 2022. Introduced in December 2022, the new regulations aim to establish requirements for electronic payment instruments and develop related registration procedures.
According to official data, the FSA will receive public comments on changes to the Payment Services Act until January 31, 2023.
“This is scheduled to be announced and implemented through the necessary procedures at the close of public comment, so the exact date has not yet been decided,” an FSA spokesman said. The FSA notes that the law enforcement deadline is set for early June.
related: Japanese regulators want crypto to be treated like traditional banks
As previously reported, the Japanese parliament passed a bill to ban foreign stablecoins in June 2022, which requires stablecoin issuers to link their cryptocurrencies only to the Japanese yen or other legal tender.
The new law, which is expected to take effect in 2023, has caused many crypto companies to fail as none of the 31 FSA-registered Japanese exchanges have since offered stablecoin operations. Several major crypto exchanges, including Coinbase and Kraken, have recently pulled operations in Japan, citing a weak crypto market.