In Japan, stablecoins are not considered cryptocurrencies

The Japanese financial regulator, the Financial Services Agency (FSA), does not classify stablecoin as a cryptocurrency. While emphasizing that fiat-pegged coins are likely not digital currencies, the regulator has clarified the registration requirements for issuers and sellers of these tokens.

Recently, interest in stablecoins in Japan has increased significantly. At the beginning of the month, Japanese Internet conglomerate GMO Internet Co. Ltdhas announced plans to launch a yen-pegged stablecoin as early as early next year. The new coin, called the Japanese yen GMO, will have the abbreviation GJY.

In early autumn, the largest financial group, the Japanese giant Mitsubishi UFJ Financial Group, began testing its own stablecoin Mufg Coin.

Due to the global increase in the level of approval for crypto assets with a fixed link to traditional assets, the FSA has clarified how this money is treated by Japanese law. 

The regulator has clarified that stablecoins pegged to fiat currencies do not belong to the class of “digital currencies” in accordance with current legislation. Stablecoin is not subject to the two main laws regulating cryptocurrency transactions in the country: “On the securities market” and “On payment services”, which came into force in April of this year after the relevant amendments were introduced.

Registration of the issuer of stablecoin is not advisable in all cases, but must be carried out in accordance with the law “On payment services” and can only imply its registration as a supplier of financial services.

According to the law, there are two forms of use of prepaid payment instruments: those intended for personal trading, and for third-party companies. Each has its own special registration and reporting requirements.

So all financial transactions exceeding 1,000,000 yen are processed only by banks and require a banking license. For transactions under 1,000,000 yen (US$9,000), a banking license is not required, but registration as a money transfer service provider is required.