Japan’s top financial regulator, the FSA (Financial Services Agency), in an exclusive interview with a leading news outlet, said that stablecoins are treated differently under the present Japanese regulations. It also clarified that stablecoins are not digital currencies and further explained the registration requirements for dealers and issuers.
On the other hand, the entire world is demanding more stablecoins and is considering them as a bridge between fiat and virtual currencies.
FSA Differentiates Stablecoins from Virtual Currencies
To regulate the nation’s crypto industry, Japan revised its Payment Services Act and Fund Settlement Law. These revised regulations went into effect in April 2017. The former law requires virtual currency exchange firms to register with the FSA and the latter describes ‘virtual currencies’, that comprise cryptocurrencies, as a means of payments and immunizes them to the Consumption Tax.
With the recorded rise in stablecoins, Financial Service Agency explained how these coins are treated under Japanese regulations.
One of the Regulators from the agency clarified that, based on the Payment Services Act, fiat-pegged cryptocurrencies do not fall under the category of ‘digital currencies’.
He further added that firms need not register as the ‘Issuer of prepaid payment instruments’ (which is based on the Payment Services Act) when digital currency dealers trade the stable coins.
Sometimes, it becomes difficult to understand the Payment method in Japan. Because Japan has two kinds of prepaid payment instruments: one is for individual-owned businesses and the other for third-party businesses. Each of them has its own registration and reporting needs.
According to fund transfer service providers, the central bank of Japan outlined that, under the Payment Services Act, those who register as fund transfer providers can perform fund transfer transactions of up to one million yen without a banking license.