- A new stablecoin law in Japan has been introduced to tackle concerns about stablecoins.
- The involvement of overseas companies has added an international dimension to this regulatory journey.
- Japan’s example has offered hope that secure and transparent stablecoin regulation is achievable.
Unlike the Wild West atmosphere in much of the crypto world, stablecoins largely exist in a regulatory gray area within most major countries. Japan, however, has stepped up as a pioneer in this space, setting an example for others to follow.
In June, the world’s third-largest economy passed a law specifically for stablecoins, setting an example that underscores the possibility of regulating these digital assets.
Japan Takes Lead on Stablecoin Regulatory Issues
Japan’s stablecoin regulations target some of the most significant concerns surrounding major stablecoins. The primary issues revolve around whether issuers truly possess the assets to back them and, if they do, how to ensure these assets are easily accessible and not tied up in opaque and risky investments.
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Nonetheless, these challenges are intricate and not easily resolved, making the launch of stablecoins in Japan time-consuming. According to Tatsuya Saito, the founder and CEO of Progmat, a software platform for issuing and managing digital assets, the first stablecoins in Japan are not expected to launch before June of the following year.
Overseas Projects Explore Yen-Based Stablecoin Launch
Saito explains that it takes at least a year to fulfill the licensing requirements and secure approval from Japanese regulators. In September, Binance Japan, the local subsidiary of the world’s largest crypto exchange, joined forces with Mitsubishi Trust Bank and Progmat to explore the development of a new stablecoin.
Saito is in discussions with ten different projects that plan to launch stablecoins in Japan, aiming to issue both dollar-based and yen-based stablecoins. While overseas companies lead some of these projects, none have initiated the licensing process yet, as they are still in the exploration phase.
On the Flipside
- The strict licensing requirements and regulatory hurdles in Japan might deter overseas stablecoin issuers from entering the market, limiting the diversity of stablecoins available to Japanese consumers.
- Even with Japan’s efforts, it’s possible that users in the country could still access stablecoins issued elsewhere, which may not adhere to the same regulatory standards.
Why This Matters
As the world’s third-largest economy takes the lead in regulating stablecoins, it offers hope for the cryptocurrency industry, showcasing that the path to regulating these digital assets is possible. Japan’s proactive stance could influence other nations to follow suit, providing a secure and transparent environment for stablecoin issuers and users.
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To learn more about Binance’s collaboration with a Japanese bank for their stablecoin launch, read here:
Binance’s Partners with Japanese Bank for Stablecoin Launch
To explore Japan’s recent approval of crypto fundraising and its significant implications, read here:
Japan Greenlights Crypto Fundraising in Major Win
