A stablecoin is not considered as a virtual currency said Japan’s top financial regulator, the Financial Services Agency (FSA).
In Japan, the cryptocurrency market is regulated by the Fund Settlement Law which defines “virtual currencies,” including cryptocurrencies, as a means of payment and exempts them from the consumption tax. The Payment Services Act, which went into effect in April 2017, requires cryptocurrency market operators to be registered in the FSA.
With the global rise in popularity of stablecoins, the FSA defines these coins in accordance with Japanese law.
“In principle, stable coins pegged by legal currencies do not fall into the category of ‘virtual currencies’ due to the Payment Services Act,” the regulator clarifies.
According to the FSA, companies don’t have to register in order to issue stablecoins due to their coin characteristics.
“Generally speaking, companies need to register as the ‘Issuer of Prepaid Payment Instruments’ or the ‘Funds Transfer Service Providers’ based on the Payment Services Act, when virtual currency dealer brokers trade stablecoins,” the regulator notes.
Earlier in October, Japanese Internet giant GMO announced its full-scale preparations to release its stable virtual currency coins. The GMO Internet’s GMO Coin operates as one of Japan’s 16 registered crypto exchanges. There are also three other crypto exchanges in the country which were allowed to operate after the FSA had reviewed their applications.