Business 31 October 2018

Ed Drake

Stablecoins are not cryptocurrencies, Japan’s FSA confirms

Japan’s chief financial regulator, the Financial Services Agency (FSA), has said that stablecoins are not virtual currencies under the definition provided in the Payment Services Act, in a statement that could have profound effects on how stablecoins are regulated in the country.

Cryptocurrency laws in Japan were overhauled back in April 2017 with revisions to the Payment Services Act and the Fund Settlement Law, effectively creating a new legal regime for cryptocurrency transactions and businesses.

In particular, cryptocurrencies are deemed to be a means of payment, and as a result, do not attract consumption tax. As such, there may be no obligation for firms issuing stablecoins to register for licenses, though they may need to register for issuing payment instruments.

In a statement to news.bitcoin.com, the FSA set out its position in relation to the status of stablecoins, saying, “In principle, stable coins pegged by legal currencies do not fall into the category of ‘virtual currencies’ based on the Payment Services Act.”

Instead, stablecoins were deemed to be a form of ‘prepaid payment instrument,’ which means a different set of regulations for companies issuing and facilitating stablecoin transactions, compared to those dealing in cryptocurrencies as legally defined.

“Generally speaking, companies need to register as the ‘Issuer of Prepaid Payment Instruments’ or the ‘Funds Transfer Service Providers’ based on Payment Services Act, when virtual currency broker dealers trade stable coins,” the regulator told the crypto news outlet.

The definition also means that transactions of up to JPY1 million, around $9,000, can be processed in stablecoins without the requirement for a banking license, allowing fund transfer services to operate up to that limit with a much lower compliance threshold.

According to the FSA, “When a person/an entity engages in exchange transactions of one million yen equivalent or less in the course of trade, registration as a funds transfer service provider is required. For exchange transactions exceeding one million yen, a license for banking business pursuant to the ‘Banking Act’ is required.”

Stablecoins, or fiat-pegged cryptocurrencies, are designed to tokenize fiat, through providing a price-stable cryptocurrency for transactions on chain.

The clarification from Japanese regulators will provide more certainty for those promoting stablecoins, at a time of increasing interest and development activity around stablecoin projects.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

Bitcoin Satoshi Vision (BSV) is today the only Bitcoin project that follows the original Satoshi Nakamoto whitepaper, and that follows the original Satoshi protocol and design. BSV is the only public blockchain that maintains the original vision for Bitcoin and will massively scale to become the world’s new money and enterprise blockchain.

COMMENT

latest news

The Bitcoin Vision: Episode 10

Business 18 April 2019

The Bitcoin Vision: Episode 10

Founding President of the Bitcoin Association Jimmy Nguyen is back in London for this week’s episode of The Bitcoin Vision, and he’s reunited with his crew who are equally excited about BSV’s latest big wins.

Read More
Dr. Craig Wright files formal libel claim against Bitcoin podcaster Peter McCormack

Business 18 April 2019

Dr. Craig Wright files formal libel claim against Bitcoin podcaster Peter McCormack

Dr. Craig Wright files formal libel claim against Bitcoin podcaster Peter McCormack, who publicly accused Wright of fraud over Satoshi Nakamoto identity.

Read More
Jack Liu responds to hasty BSV delistings, launches BSV-powered exchange & wallet

Business 18 April 2019

Jack Liu responds to hasty BSV delistings, launches BSV-powered exchange & wallet

Delisting Bitcoin SV from exchanges has inspired Jack Liu to start trading on his new BSV-powered exchange, FloatSV, earlier than expected.

Read More