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Circle Considers Issuing Stablecoin in Japan as Legislation Takes Effect

Circle, a prominent payment services company, is contemplating the issuance of a stablecoin in Japan following the implementation of legislation governing stablecoins on June 1. Jeremy Allaire, the co-founder and CEO of Circle, expressed this intention in an interview with CoinDesk Japan. Allaire believes that Japan could become an immensely significant market if stablecoins gain wider acceptance for cross-border trade, foreign currency transactions, and global commerce.

Japan’s stablecoin bill positions the country as one of the pioneers in establishing a regulatory framework for using overseas stablecoins. According to Allaire, this legislation is “the most important thing the government and the Financial Services Agency have done.” He commends Japan’s progressive stance on stablecoins and their potential impact on the financial landscape.

Circle is keen on forging partnerships in Japan, as evidenced by Allaire’s recent visit. Japan’s revised Payment Services Act classifies stablecoins backed by legal tender as an “electronic payment method” and permits issuance. However, stablecoin issuers must adhere to stringent regulations. These include pegging the stablecoin value to the yen or another legal tender and ensuring the right of holders to redeem them at face value. Only licensed financial institutions, such as banks, registered money transfer agents, and trust companies, can issue stablecoins.

In December of the previous year, Japan’s Financial Services Agency lifted the ban on overseas stablecoins, facilitating further exploration and innovation. Circle, for instance, recently acquired a Major Payment Institution (MPI) license in Singapore. This license enables the company to offer services related to digital payment tokens and cross-border and domestic money transfers in Singapore.

The interest in stablecoins among major Japanese financial institutions is also evident. Mitsubishi UFJ Trust and Banking Corporation have announced their plans to launch their stablecoin platform, Progmat, further underscoring the growing significance of stablecoins in the financial sector.

With Japan’s embrace of stablecoins and the regulatory framework in place, the country has positioned itself as a potential leader in this emerging sector. Circle’s consideration of issuing a stablecoin in Japan reflects the growing interest and opportunities that stablecoins present for cross-border transactions and global commerce. As the ecosystem evolves, collaborations and innovations in the stablecoin space will likely continue to shape the financial landscape both in Japan and beyond.

 

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