Financial services agency (fsa) of japan has announced a draft system and guidelines for the circulation of stablecoins, which are cryptocurrencies with values tied to legal currencies such as the u.s. dollar. the fsa is also seeking public feedback for a draft regulation that will allow japanese crypto exchanges to handle stablecoin trading. the new framework will be applied in conjunction with the revised payment services act coming into force in 2023.
Announcement from the fsa was made this past june, when the japanese parliament passed a law that clarified the legal status of stablecoins and defined them as digital money. the law also stipulated that stablecoins can only be issued by licensed banks, registered money transfer agents, and trust companies.
Move by the fsa is intended to stabilize the price of otherwise volatile cryptocurrencies like bitcoin and to provide an alternative to fiat currency as a store of value or unit of account. in order to ensure the effectiveness of recording transaction information and to prevent money laundering, the fsa is requiring local crypto exchanges to maintain sufficient collateral when handling foreign-issued stablecoins.