Finally, the Japanese government opened its hand to adopt the stablecoin business in the country but under the country’s strict rules & regulatory policies, to keep the bad actors away.
Japan is a tech-adoptive region in the world and also this country provides legal clarity to the crypto sector under the Payment Services Act, which defines “crypto-assets” as payment methods that are not denominated in fiat currency and can be used to pay unspecified persons. Any citizen in this country can buy, sell & trade crypto assets at zero tax until the trader’s profit remains below 200k JPY.
On 1 June 2023, Japan published its revised Payment Services Act to confirm that token issuers firms in the country are allowed to issue Stablecoin.
Under the new rules, token issuers firms needed to provide full detail & proof that they are holding the exact amount of backing funds behind the issued tokens.
In short, Japanese laws brought clarity that stablecoins & Crypto assets are different things, and local businesses, including banks, are allowed to issue & use them. In the case of stablecoin distributors, they need to keep all the distribution & transaction records.
According to a few local media reports, the newly revised rules are optimistic for banks because they will allow banks to provide B2B payment service, where Banks will only issue stablecoin tokens & businesses will not require permission every time for every big transaction.
Japanese media CoinPost reported:
“If (Japanese) stablecoins lead to an increase in global transactions, it may become easier [for issuers] to earn fees by facilitating payments between multinational companies.”
Stablecoin & centralization
It is a reality that the majority of the stablecoins in the crypto sector are fully centralized, which means the issuer or the backend firm can easily freeze the transaction in the network.
Tether (USDT) & Circle (USDC) are the top two stablecoin firms in the crypto sector & they froze huge amounts of stablecoin money on half of the enforcement agencies.
Here under the revised rules of Japan, there is also a provision for all the stablecoin issuers to keep control of the stablecoin wallet so that they can freeze & stop the redemption of the funds in case of any suspicious activities.