Stablecoins from overseas may circulate in Japan! The Japanese Financial Services Agency is expected to lift related restrictions next year.

Due to the strict regulations of Japan's Stablecoin Act, overseas issued stablecoins such as USDC or USDT cannot be used domestically in Japan. However, the Japanese Financial Services Agency is expected to relax restrictions on overseas stablecoins next year, allowing them to circulate in Japan if they meet certain conditions.

Reasons for Japan's Ban on Overseas Stablecoins

According to previous reports, the stablecoin law enacted by Japan in June of this year clarifies the legal status of stablecoins, defining them essentially as digital currencies that must be pegged to the Japanese yen or other legal tender and ensure that holders have the right to redeem them at face value.

Furthermore, the law also stipulates that stablecoins can only be issued by licensed banks, registered money transfer agents, and trust companies, and requires issuing companies to have collateral assets as security. Therefore, stablecoins issued by overseas issuers such as USDC or USDT cannot be listed on exchanges in Japan.

Read more: Japan Passes Stablecoin Law! Must be Pegged to Legal Tender, Guaranteed Redemption, and Can Only be Issued by Specific Financial Institutions

Lifting the Ban on Overseas Circulation of Stablecoins

According to a report by Japanese media CoinPost, the Financial Services Agency of Japan will lift the ban on the circulation of stablecoins issued overseas within Japan. After amending the Cabinet Office regulations and formulating guidelines, the relevant plan is expected to be implemented next year in conjunction with the revised "Fund Settlement Act."

After Japan lifts the restrictions on overseas issuance of stablecoins in the future, dealers in Japan handling overseas stablecoins will be required to safeguard assets and are advised to set a transfer limit of 1 million Japanese yen per transaction. Additionally, to prevent money laundering, overseas stablecoin dealers may be required to record transaction information such as names.