The crypto world watched with interest as regulations governing stablecoins came into effect in Japan on June 1st. The CEO of the payment services company, Circle, Jeremy Allaire revealed that his company is looking to issue its own stablecoin in the Far Eastern land. His assertion that Japan will become a massive market if stablecoins become more commonly used for cross-border commerce and foreign currency transactions is of particular note.
In fact, Allaire is so certain about the potential that Japan offers that he visited the country last month, looking for possible partnerships. Japan’s move to establish legislative framework for the use of overseas stablecoins is seen by Allaire as an important stride, potentially turning the country into a hub for the burgeoning stablecoin market.
However, the innovative regulation comes dressed in a cloak of strict rules. Not just any institution can issue stablecoins under the new law – only licensed financial institutions like licensed banks, registered money transfer agents, and trust companies qualify. Furthermore, stablecoins must be pegged to the yen or another legal tender and must guarantee holders the ability to redeem them at face value.
This initiative by Japan’s Financial Services Agency (FSA) to lift the ban on overseas stablecoins put into motion in December last year isn’t without its sceptics. But Circle doesn’t seem deterred – the company recently secured a Major Payment Institution (MPI) license in Singapore, paving the way for them to offer a slew of payment token services, alongside domestic and cross-border money transfer services in the city-state.
Moreover, the enthusiasm towards this new regulatory framework is palpable in Japan itself, with some of the country’s largest financial institutions diving headfirst into the stablecoin pool. The Mitsubishi UFJ Trust and Banking Corporation, for instance, has already announced its plans to launch its own stablecoin platform, dubbed Progmat.
While the strict rules woven into the legislation could be viewed as a deterrent, they could also be seen as a necessary measure of safety, designed to appease both crypto enthusiasts and those concerned about the transition to decentralised monetary systems, ensuring that the future of blockchain technology in the Land of the Rising Sun is a secure one.
Source: Coindesk
