While the world may be demanding more and more stablecoin and considering them as bridge between virtual currencies and fiat currencies, Japanese regulator, the Financial Services Agency has emphasized that they are not virtual currencies and also clarified their registration requirement.
Characteristics of Stablecoin different from Virtual Currencies says FSA
According to a report published on Bitcoin.com, The Financial Services Agency said that that’s characteristics of Stablecoins are different from that of Virtual currencies and hence they do not fall under the legal purview of cryptocurrencies.
With the rise of cryptocurrencies, Japan had amended its Fund Settlement Law and Payment Services Act so that it could regulate the country’s crypto industry. These amended laws went into effect in April last year. The Fund settlement Law defines “virtual currencies,” which include cryptocurrencies, as a means of payment and exempts them from consumption tax while the Payment Services Act requires cryptocurrency exchange operators to register with the Financial Services Agency (FSA).
Understanding the global rise in popularity of fiat-pegged cryptocurrencies, commonly referred to as stablecoins, The FSA made a clarification stating
“In principle, stablecoins pegged by legal currencies do not fall into the category of ‘virtual currencies’ based on the Payment Services Act.”
The regulator further added
“Generally speaking, companies need to register as the ‘Issuer of Prepaid Payment Instruments’ or the ‘Funds Transfer Service Providers’ based on Payment Services Act, when virtual currency broker-dealers trade stablecoins.”