Japan’s Financial Services Agency or FSA clarified that stablecoins are not cryptocurrencies under the current regulatory framework, according to a report by Bitcoin.com. The financial regulator also talked about the registration requirements for stablecoins’ issuers and dealers.
Stablecoin is a term used to describe cryptocurrencies meant to hold stable values, designed to minimize the price volatility.
In Japan, crypto companies are required to follow Fund Settlement Law and Payment Services Act. The Fund Settlement Law defines virtual currencies, including cryptocurrencies, as a means of payment and exempts them from consumption tax. Further, the Payment Services Act requires cryptocurrency exchange operators to register with the FSA.
Stablecoins, or fiat-pegged cryptocurrencies, do not fall into the category of virtual currencies based on the Payment Services Act, the FSA noted.
When cryptocurrency broker dealers trade stable coins, the companies need to register as the ‘Issuer of Prepaid Payment Instruments’ or the ‘Funds Transfer Service Providers’ based on Payment Services Act.
In early October, Japan’s internet company GMO had announced that it would start full-scale preparations to issue stable coins of virtual currency.