Business 2 months ago

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 Referred to as BTC coins. Bitcoin Satoshi Vision (BSV) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BSV is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

COMMENT

Add a Comment

lastest news

Boerse Stuttgart to launch crypto trading venue in 2019

Business 2 days ago

Boerse Stuttgart to launch crypto trading venue in 2019

Boerse Stuttgart, the firm behind the Stuttgart Stock Exchange, is to launch a crypto trading market in 2019, in partnership with solarisBank. According to a statement published by the exchange, Germany’s second largest, Boerse Stuttgart ...

Read More
Startup Revolut gains European banking license

Business 2 days ago

Startup Revolut gains European banking license

UK-based fintech firm Revolut has been awarded a banking license in Lithuania, giving the firm access to provide current accounts and loan services across the EU from 2019. The London startup will initially focus on ...

Read More
Basis stablecoin folds, will return $133M in investments

Business 2 days ago

Basis stablecoin folds, will return $133M in investments

Basis, the heavily funded stablecoin, has confirmed rumors that it is to close, returning all of the funds to investors. The project, which had gained significant traction, was shuttered due to the unfavorable legal landscape, ...

Read More