Japan is preparing to introduce revised regulations that will allow certain stablecoins, such as Tether (USDT) and USD Coin (USDC), to be traded and distributed in the country as early as June 2023. The Financial Services Agency (FSA) aims to ensure security and compliance through new regulatory frameworks, marking a significant step toward integrating digital assets safely within Japan's financial system. Key Takeaways Japan’s FSA will permit certain stablecoins by June 2023 but with strict requirements. Only stablecoins passing safety, compliance, and reserve asset checks will be allowed. The regulation is an amendment to Japan’s Payment Services Act from 2022. Transaction limits and user data collection will be enforced for approved stablecoins. Legislation is partly a response to past controversies in the stablecoin market. Background: Why the Ban Was Introduced In June 2022, Japan’s parliament enacted a bill restricting foreign stablecoins that were not pegged to the Japanese yen or another legal tender. This action was taken, in part, due to the collapse of TerraUSD (UST), which had significant global repercussions. The strict stance was motivated by a desire to protect users and maintain stability in the country’s financial sector. FSA’s New Rules for Stablecoins Under the amended regulations, not all foreign stablecoins will gain automatic approval. The FSA has clarified several core criteria: Stablecoins must pass individual safety and user-protection reviews. Issuers should be subject to regulations in their home countries that are equivalent to Japanese standards. Funds backing stablecoins must be appropriately safeguarded and highly liquid. Exchanges listing approved stablecoins must collect user transaction details. A per-transaction remittance limit of around $7,500 will apply. Table: Key Requirements for Stablecoin Approval Requirement Description Regulatory Equivalence Issuer regulated similarly to Japan Asset Backing Fully backed by liquid, secure assets User Protection Robust compliance and monitoring Transaction Reporting Data collection on user transfers Transfer Limit $7,500 max per transaction Impact on Crypto Market and Exchanges Japan’s move has already influenced major crypto exchanges. Since the ban, none of the 31 FSA-registered platforms have supported stablecoin operations, and some major names, including Coinbase and Kraken, exited the Japanese market citing adverse conditions. The FSA expects the new policies to provide renewed confidence and potentially attract international partnerships. Analysts believe these changes could make cross-border remittances for Japanese customers both faster and more affordable. Next Steps and Industry Outlook The FSA opened public consultation on the new regulations in December 2022, with feedback accepted until January 31, 2023. Full enforcement is targeted for early June, following the closure of this feedback period. The transition is also expected to simplify the listing process for local coins and foster innovation while maintaining strong consumer protections. Japan’s plan to reintroduce certain stablecoins under careful scrutiny signals a progressive yet cautious approach to digital asset adoption, reflecting a broader government ambition to modernize and liberalize the financial ecosystem. References Japan’s FSA expects to allow certain stablecoins by June 2023, Cointelegraph. Japan’s FSA to lift ban on foreign stablecoins by June 2023, CoinGeek.