- The authority began soliciting public opinion on potential solutions.
- Local officials have expressed warnings about the dangers of using algorithmic stablecoins.
Japanese authorities are reevaluating their stance on a number of key regulations. Pertaining to the usage of stablecoins like Tether USDT in the cryptocurrency market. Nikkei, a Japanese news outlet, stated on December 26. That the Financial Services Agency (FSA) of Japan will allow the domestic circulation of foreign-issued stablecoins beginning in 2023.
If local exchanges in Japan meet the requirements of asset protection via deposits. And a maximum remittance, they will be permitted to facilitate stablecoin trading. Moreover, the report states, “If payment using stablecoins spreads, international remittances may become faster and cheaper.”
Concerns Over Dangers of Stablecoins
Furthermore, the FSA has warned that allowing stablecoin distribution in Japan would need stricter restrictions pertaining to Anti-Money Laundering measures. On Monday, the authority began soliciting public opinion on potential solutions to the problem of Japan’s stablecoin prohibition. Moreover, there will be no stablecoins issued by non-banking organizations in Japan after June 2022, per a law enacted by the country’s parliament.
With no local exchanges offering trading in stablecoins like USDT or USDC, the recent regulation will have far-reaching effects on the services available for trading cryptocurrencies in Japan. Neither BitFlyer nor Coincheck were among the 31 Japanese exchanges listed with the FSA as of November 30, 2022, and neither were dealing with stablecoin trading.
Moreover, regulations pertaining to cryptocurrencies have been a recent focus for the Japanese government. The tax committee of the Liberal Democratic Party, Japan’s governing party, accepted a proposal on December 15 to exclude cryptocurrency enterprises from paying taxes on paper profits from issuing tokens. Furthermore, ;ocal officials have already expressed warnings about the dangers of using algorithmic stablecoins like TerraUSD (UST).