Circle mulls the launch of stablecoin in Japan
Circle, the issuer of the second-largest stablecoin by market capitalization, is mulling the release of a fiat-backed cryptocurrency in Japan under the new legislation that came into effect last month.
Circle CEO Jeremy Allaire, in an interview with CoinDesk Japan, said he believes that Japan has the potential to become a key market for their products. Allaire’s remarks highlighted the strategic importance of Japan in Circle’s plans, as they anticipate the growing utilization of stablecoins in financial transactions on a global scale.
The Boston-based stablecoin issuer received in June its major payment institution (MPI) license for digital payment token (DPT) services from the Monetary Authority of Singapore (MAS). This license enables Circle Singapore to provide various services in the city-state, including digital payment token services, cross-border money transfer services, and domestic money transfer services.
Japan’s financial regulator has been working on allowing domestic distributors to handle stablecoins issued outside the country on the condition that they maintain sufficient collateral.
The legal revision primarily introduces a registration system for stablecoins circulation and reinforce anti-money laundering measures. Additionally, it enables overseas businesses to issue stablecoins in the country through custodians of digital assets.
Japan’s parliament passed a bill in June 2022 to regulate crypto tokens whose value is pegged to that of the yen, dollar or other currencies. The new law is aimed at curbing the financial system risks of stablecoins and strengthen protections for investors.
Under the new law, stablecoins can be issued by licensed banks, registered money transfer agents and trust companies. Stablecoin licenses are expected to be issued only to highly credible businesses in charge of issuing and managing them, as well as intermediaries responsible for circulation.
The Japanese watchdog has repeatedly voiced doubts surrounding the anti-money laundering measures. As a result, none of the 31 Japanese crypto exchanges registered with the FSA list any stablecoins.
Shortly after Japan overturned a ban on fiat-pegged cryptocurrencies, Japan’s biggest lender, Mitsubishi UFJ Financial Group (MUFG), unveiled plans to introduce and distribute stablecoins backed by banks on various public blockchains. Also in March, three Japanese banks announced plans to develop a payment system that integrates their stablecoins on a public blockchain while satisfying legal requirements.
The trio cited few use cases and benefits, including general consumer use and business-to-business remittances. They also argue that each of the involved banks aims to issue and remit its own stablecoin that can be used in Ethereum wallets such as MetaMask while complying with Japan’s new fund settlement laws.