The most raved-about project of Facebook, Libra, will not face regulatory issues in Japan, as the country’s financial regulator approved of the project’s white paper.
The Financial Services Agency (FSA), a governmental organization which is tasked with legislating cryptocurrencies and crypto exchanges in Japan, believes that Libra is “unlikely to be a crypto asset [cryptocurrency].”
The law in Japan states that crypto assets are “not legal currencies or assets based on legal currencies.” And according to Facebook, Libra will be backed by a “basket” of fiat currencies including the United States dollar, the euro, the pound sterling, and the Japanese yen, meaning it will not be categorized as a cryptocurrency in Japan.
However, Nikkei believes that the FSA will most likely categorize Libra transactions “as general money transactions and remittances.” Libra-related banking transfers in the country will be subjected to “strict” regulations and may have a cap of 1 million yen (around USD 9,200) for each transaction. The FSA also regulates mobile financial transactions.
Last week, the legal status of Libra was presented by So & Sato, a leading Japanese law firm, at the request of the Japan Blockchain Association (JBA).
The law firm said that Facebook will most likely not encounter any regulatory restrictions from Japanese authorities. The said that the technology on which Libra runs is “orthodox” and that the developers who made it were “conscious of regulatory authority guidelines.”
As long as Libra does not turn out to be a stablecoin, it will have “no restrictions under current Japanese law,” stated So & Sato.
Under Japanese law, if the FSA categorizes a token to be a crypto asset, the issuers of the asset must first get licensed by the FSA before it can be offered for trading in Japan.
The head of the Bank of Japan said last month that he will be monitoring Libra to see “whether cryptocurrencies can gain people’s confidence as a means of payment.”
Many financial and regulatory bodies from other nations have wary feelings when it comes to Facebook’s Libra, with some asking the media giant to stop the launch on this project.
Featured Image: Wall Street Journal