Japan's Financial Regulator: Stablecoins Are Not Cryptocurrencies, Have to Be Regulated Individually

  • Japan's financial regulator, the Financial Services Agency (FSA), has said that stablecoins do not meet the criteria to be considered cryptocurrencies.
  • Japan's self-regulatory body, the Virtual Currency Exchange Association (JVCEA), is not authorized to regulate stablecoins.

Japan’s financial regulator, the Financial Services Agency (FSA), recently announced that it does not consider stablecoins to be cryptocurrencies. This, according to the nation’s current regulatory framework.

At present, there are two specific regulatory requirements, or laws, that crypto firms operating in Japan must follow. They include the nation’s Payment Services Act and the Fund Settlement Law.

Under Japan’s Fund Settlement Law, cryptocurrencies are considered a method of payment, or medium of exchange, and their users need not pay taxes. The Payment Services Act requires that local digital asset exchanges register with the FSA.

Stablecoins Are Not "Virtual Currencies"

According to the Payment Service Act, stablecoins do not meet the criteria, or fit the definition, of “virtual currencies.” An FSA representative told Bitcoin News: “In principle, stablecoins pegged by legal currencies do not fall into the category of ‘virtual currencies’ based on the Payment Services Act.”

Moreover, the FSA has found that all the different stablecoins in circulation have varying characteristics, and because of this, there is no uniform criteria that can be used to categorize them. This also means there’s no standard, or common rule that can be applied when determining how they should be legally registered.

The FSA spokesperson noted:

Due to [varying] characteristics [of stablecoins], it is not necessarily appropriate to suggest what those companies need to obtain or register before issuing stable coins.

Japan's Financial Service Agency

As CryptoGlobe reported on October 24th, Japan’s Virtual Currency Exchange Association (JVCEA) is now authorized by the FSA to operate as a self-regulatory body - which means that it can create regulatory guidelines for local crypto exchanges to follow, and also enforce penalties in cases of non-compliance.

The JVCEA Cannot Regulate Stablecoins

However, given that the FSA has now stated that stablecoins are not cryptocurrencies, the JVCEA will not be able to regulate them. Presumably, the nation’s financial regulator will now have to determine how to regulate each stablecoin individually.

As CryptoGlobe covered, one of the biggest problems facing digital currencies is that they are extremely volatile. Although the bitcoin (BTC) volatility index is at its lowest since December of 2016, and the prices of other major cryptos have also experienced relatively less volatility, many institutional investors might still be waiting on the sidelines as they may still view digital currencies as highly risky investments.

With the launch of many new stablecoins, would-be investors now have a way to enter the crypto market without having to experience the adverse effects of high volatility (to a certain extent).

Data Shows Hodlers Outperform Traders, Binance CEO Says

  • Binance CEO Changpeng "CZ" Zhao claims long-term cryptocurrency holders outperform traders.
  • Zhao said the crypto markets are still in their "early game" and that traders in 2025 will wish they had invested earlier. 

Binance chief executive officer Changpeng “CZ” Zhao has said that data shows long-term crypto holders outperform short-term traders.

In a series of tweets published May 24, CZ pointed out the irony of investors believing they got into cryptocurrency “too late” relative to the market, including himself. According to the exchange CEO, traders five years from now will likely be expressing a similar sentiment. 

CZ continued, explaining that he was initially envious of crypto investors who had been in the market since 2010 or 2011, despite being an early adopter himself. 

In response to a tweet asking whether “holding” is good financial advice, Binance’s chief executive revealed that data shows long-term crypto investors outperform traders. CZ commented on the difficulty of holding assets for a long period of time, which he called “passive” relative to the more active position of trading. 

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