The “lifting” of the ban and the issuance of stablecoins in the country “is expected to improve the efficiency of payments between companies in Japan and foreign parties.”
According to the revised Payment Services Act enacted today, June 1, Japanese banks are now able to issue stablecoins this year after a long wait.
Earlier in June 2022, Japan passed a law governing satblecoin and became one of the first major economies to introduce a legal framework for this currency. In December 2022, the Japanese Financial Services Agency lifted the ban on foreign-issued stablecoins.
With the revised payment services law coming into effect, banks, trust companies and money transfer operators will be allowed to issue stablecoins. However, these entities need to first register with the Government to obtain an official license for this type of activity.
In particular, businesses circulating foreign stablecoins in Japan will need to comply with capital maintenance requirements, one of the prerequisites to protect consumer interests.
According to research, with stablecoins, goods will be traded in exchange for funds received through the blockchain ledger, which means payments will be settled immediately.
Meanwhile, individuals and businesses can transfer money to each other without going through Japan’s interbank clearing network. A stablecoin platform is expected to charge less money transfer fees than a bank.
Since individuals have been able to transfer up to 100,000 yen ($715) to each other for free if their banks participate in the industry’s Cotra micropayments system, the majority of demand for stablecoins is expected to come from businesses.
The market for corporate payments amounts to about 1 trillion yen per year. Issuing stablecoins backed by dollars and euros will likely attract demand from multinationals.
Currently, some big names in Japan are “in the process” to issue this currency. In which, Mitsubishi UFJ Trust and Banking is preparing to issue Progmat Coin. This stable coin will be used to buy digital securities and non-fungible tokens.
Digital lender Minna Bank plans to issue its own stablecoin, along with Tokyo Kiboshi Financial Group and Shikoku Bank. All three banks will use a platform provided by Tokyo-based startup GU Technologies.
Not only Japan, currently, central banks around the world are also exploring the issuance of their own digital currencies. However, it is predicted that advanced economies will not reach that stage for another 3-4 years.
Meanwhile, stablecoins can serve as digital community currencies for a specific geographic region. Therefore, stablecoins can be considered and selected to fill the gap until then.