Japan’s upper parliamentary house, the House of Councillors, has approved a legal amendment that will police stablecoin issuance and ensure that only regulated companies are allowed to issue cryptoassets.
Per Nikkei, the lawmakers voted in favor of an amendment to the Funds Settlement Law in a plenary session on June 3. The amendment places a series of restrictions on both the crypto and stablecoin sectors and will come into force in a year’s time. After that point, only banks and other recognized and regulated financial institutions such as trust operators will be allowed to issue cryptoassets or stablecoins.
The amendment had an easy passage through parliament and was formulated largely by the nation’s top financial and crypto regulator, the Financial Services Agency (FSA), which submitted its proposals for legal change in March.
The FSA is concerned that the increase in stablecoin issuance and distribution will necessitate more anti-money laundering measures.
The new regulations apply only to domestic issuers or issuers who directly target Japanese users, but as stablecoins are not currently listed at Japanese exchanges, the measures will mainly apply to the Japanese banks and financial firms that are hoping to roll out fiat yen-pegged stablecoins in the near future.
The amendment grants stablecoins legal status, and defines them as having a redeemable value, much like vouchers or loyalty points. It also stated that all stablecoins must either be pegged to the yen or another widely recognized fiat such as the USD. Issuers must also guarantee token holders the right to swap their tokens for fiat upon request.
Banks, including the giant Mitsubishi UFJ, have been waiting for the measure to pass before issuing their own stablecoins, with most hoping to use the coin in the retail payments sphere.
Meanwhile, FTX has become the first overseas player to enter the Japanese crypto exchange sector in earnest, via a major M&A move. The firm bought the Quoine Corporation – operator of the FSA license-holding Liquid exchange – in a deal earlier this year.
In a press release, FTX explained that the company’s founder and CEO Sam Bankman-Fried would work as the Interim CEO of the exchange, now renamed FTX Japan.
Bankman-Fried was quoted as stating:
“The acquisition not only gives us a technological advantage, but also allows us to work directly with Japanese regulators in a transparent, constructive and positive manner.”
Source: Cryptonews
