Breaking Bitcoin News

1 BTC = 1 BTC

Latest Article ↗️

Breaking Bitcoin News

1 BTC = 1 BTC

Latest Article ↗️

Japan Declares Stablecoins Are Not Crypto

written by

Japan's Financial Services Agency Declares That Stablecoins Are Not Cryptocurrencies

Support free journalists: > send a tip

Japan’s Financial Services Agency (FSA) has declared that stablecoins, like Tether (USDT), Gemini Dollar (GUSD), USD Coin (USDC) and Paxos Standard (PAX), are not cryptocurrencies under the law. Rather, they are prepaid payment instruments and are regulated differently from cryptocurrencies.

Stablecoins are inherently different than other cryptocurrencies since they are pegged to fiat currencies, and are backed by fiat currencies held in reserve at a bank. All other cryptocurrencies have a fluctuating price according to supply and demand, while stablecoins should have a constant price of 1 unit of the fiat currency they are pegged to, such as USD, EUR, and JPY. That being said, they use blockchain technology and are essentially, a hybrid of fiat and cryptocurrency.

The FSA stated: “In principle, stable coins pegged by legal currencies do not fall into the category of ‘virtual currencies’ based on the Payment Services Act… Generally speaking, companies need to register as the ‘Issuer of Prepaid Payment Instruments’ or the ‘Funds Transfer Service Providers’ based on Payment Services Act, when virtual currency broker dealers trade stable coins”. Therefore, stablecoin issuers in Japan do not have to register with the FSA as a crypto company. Unless of course they are engaging in crypto activity besides stablecoins, which is likely.”

There are two types of prepaid payment instruments according to Japanese law, for one’s own business and for a third party, and these have different regulations. As for fund transfer service providers, if they transfer more than JPY 1 million (USD 9,000), they need a banking license to operate. This could be a major obstacle for Japanese companies to issue and transact stablecoins but is simultaneously logical.

The FSA said: “When a person/an entity engages in exchange transactions of one million yen equivalent or less in the course of trade, registration as a funds transfer service provider is required. For exchange transactions exceeding one million yen, a license for banking business pursuant to the ‘Banking Act’ is required.”

This decision by the FSA was perhaps brought about by the internet giant GMO, which runs a crypto exchange, and announced on 9 October 2018 that it is preparing to issue stablecoins.

 

Follow BitcoinNews.com on Twitter: @bitcoinnewscom

Telegram Alerts from BitcoinNews.com: https://t.me/bconews

Want to advertise or get published on BitcoinNews.com? – View our Media Kit PDF here.

Image Courtesy: Pixabay

Help spread this article :)

BitcoinNews.com is NOT INVESTMENT ADVICE

Opinions expressed are entirely their own and do not necessarily reflect those of BitcoinNews.com

For informational purposes only. Individuals and entities should not construe any information on this site as investment, financial, legal, tax, accounting or other advice. Information provided does not constitute a recommendation or endorsement by BitcoinNews.com to buy or sell bitcoin, cryptocurrencies or other financial instruments. Forecasts are inherently limited and cannot be relied upon. Do your own research and consult a professional advisor. The opinion of authors do not reflect those of BitcoinNews.com 

   Advertisement

Read More Bitcoin News

   Advertisement