Japan’s Financial Services Agency (FSA) has moved to broaden how the country treats certain foreign stablecoins—formally recognizing some trust‑issued tokens as “electronic payment instruments” rather than securities under domestic law.
What changed
- On Tuesday the FSA announced amendments to the Cabinet Office Ordinance that will allow specified trust‑type stablecoins issued by foreign trust banks and similar entities to be handled under Japan’s Payment Services Act, not as “securities” under the Financial Instruments and Exchange Act (FIEA).
- The rule change takes effect June 1, 2026, and permits domestic operators registered as electronic payment instrument operators to work with qualifying foreign trust‑issued stablecoins.
The qualification tests
The ordinance sets four core requirements for a foreign trust stablecoin to qualify:
1. Issuer legal status and supervision: The issuer must be registered or licensed under foreign laws judged equivalent to Japan’s Payment Services Act or Banking Act, and be supervised by an authority willing to share oversight information with the FSA. The FSA will review each issuer’s supervisory cooperation framework as part of its suitability assessment.
2. Reserve and asset management: Reserve assets backing the stablecoin must be managed under applicable foreign law 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—such as mechanisms to suspend suspicious transactions.
4. Currency consistency: The trust property and reserve assets must be denominated in the same currency.
Case-by-case redemption assessment
Regulators will assess, case by case, whether a given stablecoin can reliably be redeemed at its issue price to the same standard as Japanese electronic payment instruments. That means stablecoins used primarily overseas may receive different treatment in Japan depending on their reserve composition, audit arrangements and supervisory ties.
Policy context and broader reforms
This move is part of a wider overhaul of Japan’s crypto rules that began with the 2022 amendment to the Payment Services Act. More recent steps include:
- An amendment to the FIEA that classifies crypto assets as financial instruments.
- A tax reform plan proposing a separate tax system for crypto transactions and a flat 20% tax on crypto income.
- Joint guidance from the FSA, the Ministry of Land, Infrastructure, Transport and Tourism, the National Police Agency and the Ministry of Finance on crypto use in real estate, which urges strict KYC and source‑of‑fund checks, reporting of cross‑border or suspicious transactions, and warns that exchanging crypto for fiat or brokering on behalf of clients can constitute regulated crypto‑exchange activities.
Why it matters
By creating a pathway for certain foreign trust‑issued stablecoins to be treated like electronic payment instruments, Japan is aiming to balance consumer protection and anti‑money‑laundering safeguards with practical access to cross‑border stablecoins. For issuers, compliance with foreign supervision, robust audits and anti‑crime controls will be critical. For domestic operators and users, the change could expand usable stablecoin options—provided they meet Japan’s standards.
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