Based on a recent report, Japan’s Financial Services Agency (FSA) has made its stance in relation to stablecoins in general known. The agency made it clear that stablecoins is not in the same category as other cryptocurrencies, under the Japanese law.
The FSA has Two Sections of Crypto Laws
The Japanese FSA recently grouped its crypto laws into two different sections.
The first one classifies cryptocurrencies as a means of payment, which makes them exempted from consumption tax. The first law is referred to as the Fund Settlement Law.
The second law which is labelled as the “Payment Services Act”. The act makes it compulsory for all cryptocurrency exchanges operating within Japan to register with the agency. Since the second law got enacted in May of this year, the rules of registration and the process of authorization to operate as a cryptocurrency exchange in Japan became more stringent.
Statements from the FSA
Based on a new report, the agency made a statement regarding this new classification of stablecoin. The FSA stated that:
“In principle, stablecoins pegged by legal currencies do not fall into the category of ‘virtual currencies’ based on the Payment Services Act.”
Going by the definitions and features of stablecoins, the agency also made it clear that, “it is not necessarily appropriate” for them to suggest what stablecoin operators need to “obtain or register before issuing stablecoins.”
As regards exchanges offering stablecoins. The agency made another statement to clarify their legal obligations.
The FSA said that:
“Generally speaking, companies need to register as the ‘Issuer of Prepaid Payment Instruments’ or the ‘Funds Transfer Service Providers’ based on [the] Payment Services Act.”
The FSA further stated that:
“Prepaid payment instruments fall into two categories: They are either for a business’ own use or for provision to a third-party business. The two categories have their own reporting and registration requirements. Fund transfer service providers are allowed to perform transactions of less than the equivalent of $9,000 without a banking license. Transactions over $9,000 must be conducted by an authorized bank”.