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Japan Leads the Way in Stablecoin Regulation: A Beacon of Possibility Amidst Global Uncertainty
- Japan, once having a ban on stablecoins, now pioneers their regulation.
- Binance collaborates with local banks, including one affiliated with Ripple, on a local stablecoin initiative.
- The upcoming World Expo 2025 in Japan promises further crypto-centric advancements.
While stablecoins have been virtually banned in Japan until recently, the country has now taken a leadership role in the area. And, in recent developments, Progmat and Binance are making progress as well as headlines. The Japanese government updated its stablecoin regulations in June, and both companies have plans to release stablecoins pegged to the Japanese Yen and other currencies by the end of 2024.
Binance Partners For Stablecoin Project
In a major development, Mitsubishi’s subsidiary Progmat and Binance are partnering to utilise the “Progmat Coin” platform, which is aimed at the issuance and management of Japanese Yen-pegged stablecoins on public blockchains. Progmat is backed by major Japanese banks such as Mizuho Bank, SMBC, and SBI Holdings.
Binance Japan’s general manager, Takeshi Chino, emphasised the stablecoin’s potential role in bridging Japan’s real economy, the blockchain sector, and the global Binance network.
He said,
The impact of having the most secure stablecoin functioning within this ecosystem is immeasurable.
Takeshi Chino However, not everyone can just issue a stablecoin in Japan, only certain financial institutions have that ability. If these stablecoins are traded on Japanese exchanges, their backing assets must be held in a trust within Japan.
Japan Taking a Leadership Role in Crypto Regulation
While this rule seems strict, especially for foreign issuers, there’s a workaround. Overseas issuers can work with local banks to issue their own stablecoin, that way they do not need to apply for a Japanese license.
This also allows issuers to delegate the local custody and management of the underlying assets, ensuring compliance with regulations.
Crypto exchanges wanting to list stablecoins must also obtain licenses, though none have commenced this procedure. Japanese regulations require that all assets backing a domestically issued stablecoin be stored within a Japanese trust.
It is also not clear if stablecoins will be a success in Japan given the complexities surrounding them. There is also the issue of liquidity and fees, said Fumiaki Sano at Kataoka and Kobayashi LPC law firm.
He added,
If a foreign stablecoin issuer wanted to build its own entity in Japan through a trust, for example, it wouldn’t have that limit. But then the stablecoin issued in Japan would be different from the stablecoin circulating globally. For example, it would be like if Circle issued USDCJ instead of USDC; there wouldn’t be the same liquidity.
Fumiaki Sano Ripple and XRP Making Waves
Continuing with Japan, SBI Holdings, a partner of Ripple, plans to use the XRP Ledger for NFT issuance during the World Expo. Emi Yoshikawa, Ripple’s VP for Strategy, expressed excitement over the potential exposure of the XRPL to a vast audience, with an anticipated 28.2 million visitors.
As Crypto News Australia reported, SBI Holdings introduced an NFT service specifically for the Osaka-Kansai Expo, named “EXPO2025 Digital Wallet NFT (Myakoon!),” allowing visitors to acquire these NFTs during events and store them directly in the app.
The NFTs, issued on the XRP Ledger, underscore the ever-growing integration of blockchain in everyday life.
Author
Aaron Feuerstein
Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.
