Japan is taking a major step toward clearer rules for foreign trust‑issued stablecoins, officially moving certain tokens out of the “securities” box and into the same regulatory category as e‑money — with strict conditions.
What changed
- On Tuesday the Financial Services Agency (FSA) approved amendments to the Cabinet Office Ordinance that will allow specific trust‑type stablecoins issued by foreign trust banks (so‑called beneficiary‑rights stablecoins) to be treated as “electronic payment instruments” under the Payment Services Act rather than as securities under the Financial Instruments and Exchange Act (FIEA).
- The amendment becomes effective June 1, 2026, and enables domestic operators registered as electronic payment instrument operators to handle these qualifying foreign stablecoins.
Four qualifying conditions
The ordinance sets four key requirements that foreign trust‑issued stablecoins must meet to qualify:
1. Issuer oversight: Issuers must be licensed or registered under foreign laws judged equivalent to Japan’s Payment Services Act or Banking Act, and be supervised by an authority that can share oversight information with the FSA. The FSA will check this supervisory cooperation during its suitability review.
2. Reserve management and audits: Reserve assets backing the stablecoin must be managed under relevant foreign laws and be subject to audits by local professionals equivalent to certified public accountants or audit firms.
3. Anti‑crime controls: Issuers must maintain systems to detect and respond to criminal misuse—including the ability to suspend transactions—and implement strong AML/KYC measures.
4. Currency consistency: The trust property and reserve assets must be denominated in the same currency as the stablecoin.
Case‑by‑case redeemability check
Even if a stablecoin meets those technical requirements, Japanese authorities will assess on a case‑by‑case basis whether it can be reliably redeemed at its issuing price to the same standard as domestic electronic payment instruments. That means some foreign stablecoins used primarily overseas could be treated differently in Japan depending on reserve composition, audit rigor, and other safeguards.
Why this matters
- These amendments broaden Japan’s legal framework for stablecoins — a process that began with a 2022 revision to the Payment Services Act — and make it easier for compliant foreign trust‑issued stablecoins to be integrated into the domestic payments ecosystem.
- The move also dovetails with wider regulatory updates: Japan recently reclassified certain crypto assets under the FIEA, pushed forward tax reforms (including a proposed flat 20% tax on crypto income), and issued cross‑agency guidance tightening rules around crypto use in real estate transactions.
Related enforcement and compliance guidance
Last month the FSA and several ministries (including the Ministry of Land, Infrastructure, Transport and Tourism, the National Police Agency, and the Ministry of Finance) released joint guidance for crypto in real estate deals. The guidance requires strict KYC and source‑of‑fund checks, sets reporting obligations for cross‑border or suspicious payments, and warns that exchanging crypto for fiat or providing brokerage services may qualify as crypto asset exchange operations — actions that can carry legal risks if unlicensed or noncompliant.
Bottom line
Japan’s updated ordinance creates a pathway for well‑regulated foreign trust‑issued stablecoins to function like electronic money in the Japanese market — but only if issuers can demonstrate equivalent supervision, transparent reserve management, robust auditing, anti‑crime controls, and reliable redeemability. The changes signal Japan’s continued push to create a controlled, transparent environment for crypto while protecting consumers and financial stability.
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