Japan could be working towards reversing a ban on the use and circulation of foreign-issued stablecoins such as USD Coin (USDC) and Tether (USDT).

According to a CoinPost report, next year, the country’s Financial Services Agency will lift the ban on the use and circulation of the stated stablecoins, ‘revising Cabinet Office ordinances and establishing guidelines’ for their use. The new regulations and guidelines will be applied in line with the latest ‘Revised Payment Services Act’ expected to come into effect in 2023.

FSA to Set a $7.5k Cap Per Transaction for Remittances

In terms of usage in remittances, individual transfers using stablecoins will be capped at 1 million Yen per transaction, approximately $7,500.

In addition, the distributors of the stablecoins in Japan will be required to protect the assets and have sufficient collateral. The same distributors will also adhere to strict anti-money laundering and know-your-customer procedures when facilitating stablecoin transactions.

Japan is Preparing for Web3 Adoption

In June of this year, Japan rushed to enact stablecoin regulation in the wake of the Terra ecosystem collapse that saw its algorithmic stablecoin of UST fall to zero. Japan’s parliament, therefore, had initially agreed to a bill that would ban the issuance of stablecoins by non-banking institutions. Only banks and trusted financial institutions were to be allowed to issue and distribute stablecoins.

The law was meant to take effect in 2023, but Japan’s government interest in Web3 adoption has led to the consideration of lifting the ban on foreign-issued stablecoins.

In early October, Japan’s Prime Minister, Fumio Kushida, announced that the country plans to expand and improve the business environment towards NFTs, the Metaverse and the general Web3 industry. PM Kushida also stressed the importance of engaging and retaining local entrepreneurs building projects in Web3.

He explained that Web3 and the Metaverse were increasingly becoming a personal interface with Generation Z. Thus, the digital space can potentially increase the value of businesses.

(By John P. Njui)