Japanese crypto exchanges will be allowed to trade stablecoins
Japanese cryptocurrency exchanges will be able to list some stablecoins in mid-2023. This was stated by the Financial Services Agency (FSA), which intends to lift the ban on the circulation of stablecoins within the country. However, there are a number of conditions to follow.
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Stablecoin issuers will be required to pass individual checks to enter the Japanese market. The purpose of it is to screen out players who do not meet the established standards of the regulator. The selection criteria are not made public.
However, it is known that a stablecoin must have a sufficient supply and ensure investors’ security. This applies to both foreign and Japanese representatives. All companies offering this asset must undergo a thorough investigation to determine whether it can be listed as an asset on Japanese crypto exchanges.
The regulator explains the strict registration rules by strengthening anti-money laundering measures. In this regard, a number of stablecoins may be prohibited after the permit comes into effect.
“This does not mean that all foreign products of so-called ‘stablecoins’ will be allowed without any restriction,” the FSA spokesman said.
There is also no guarantee that the stablecoin leaders, USDT from Tether and USDC from Circle, will successfully pass the check. The Japanese regulator declined to comment on the possibility of an appeal until a final decision was made. The FSA is currently soliciting public feedback on the ability to trade stablecoins on Japanese crypto exchanges. The survey will run until January 31st. However, it is expected that the restrictions on stablecoins will be lifted in June 2023.
The review of the stablecoin policy is part of the updated Payment Services Act, which will come into effect this year. The new law aims to reduce the risks associated with digital coins while also strengthening investor protection. Therefore, it implies that stablecoins can only be issued by licensed banks, registered payment companies, and fiduciary issuers.
Stablecoins were banned by the Japanese parliament earlier in 2022. However, they have now decided to regulate them. The Japanese government most likely decided to reconsider its position in order to support the state's cryptocurrency policy.
Japanese exchanges registered with the FSA were unable to provide buying and selling activities of stablecoins following the passage of a bill that forbade the trading of stablecoins. As a result, popular cryptocurrency platforms Kraken and Coinbase have suspended operations in this country.
The news that some stablecoins might be listed first surfaced not long after Coinbase left the area.
Kraken has decided to suspend operations for Japanese residents from January 31, 2023. Representatives of the exchange explained that this decision was based on difficult market conditions in the country, as well as the weakening of the global crypto market. The resources that need to be spent on developing a business in Japan are inappropriate, according to Kraken.
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