- Japan will be a huge market if stablecoins become common for cross-border trade, global commerce
- Stablecoins will have to be pegged to the yen or another fiat, ensure redemption at face value
Circle is considering issuing a yen-backed stablecoin after Japan passed laws on these cryptocurrencies effective June 1, Circle CEO and cofounder Jeremy Allaire told CoinDesk in an interview.
According to Allaire, Japan could become a huge market if stablecoins became more common for cross-border trade, global commerce, and foreign currency transactions.
Japan is the first country to set a stablecoin framework
Japan’s law on stablecoins makes it among the first countries in the world to set a framework for using stablecoins abroad. Allaire referred to this as “the most important thing the government and the Financial Services Agency have done,” adding his company was looking into partnerships in the Asian country.
Circle has become increasingly active in Asia. The government of Singapore recently issued it a Major Payment Institution (MPI) license, which will enable the company to offer domestic and cross-border money transfer services and digital payment token services there.
Stablecoins are certified as an e-payment method
Under the country’s revised Payment Services Act, stablecoins are considered an “electronic payment method.” These cryptocurrencies are designed to minimize price volatility by pegging their value to a reserve asset, typically a fiat currency. They aim to provide stability and act as a reliable medium of exchange within the cryptocurrency ecosystem.
Stablecoins have gained popularity due to their potential to address some of the challenges associated with traditional cryptocurrencies, such as price volatility and lack of widespread acceptance. They offer benefits such as faster cross-border transactions, lower fees, and increased accessibility to decentralized finance (DeFi) applications.
Tough rules for issuers
Stablecoins will have to be pegged to the yen or another fiat currency and ensure the right to redemption at face value. Only licensed banks, trust companies, and registered money transfer agencies will be allowed to issue stablecoins in Japan.
Last year, Japan’s Financial Services Agency eliminated a ban on overseas use of stablecoins.
Among the leading Japanese enterprises that are exploring stablecoins is Mitsubishi UFJ Trust and Banking Corporation, who plan to launch Progmat, a proprietary stablecoin platform.
