The lack of uniformity in stablecoins has led Japan’s Financial Services Agency (FSA) to conclude that stablecoins are not cryptocurrency.
Not All Digital Assets Are Created Equal
Japan’s Financial Services Agency (FSA) recently announced that it does not believe stablecoins should be classified in the same category as cryptocurrencies.
According to Japan’s Payment Services Act and the Fund Settlement Law, cryptocurrencies are considered a method of payment that users do not need to pay taxes for. Meanwhile, stablecoins do not meet these criteria as the majority of the current dollar pegged digital assets have varying characteristics, and the lack of a uniform set of characteristics makes it impossible to categorize them.
JVCEA Cannot Regulate Stablecoins
Under the Payment Service Act, stablecoins fail to meet the current criteria for classifying as a “virtual currency” and an FSA spokesperson said, Due to [varying] characteristics [of stablecoins], it is not necessarily appropriate to suggest what those companies need to obtain or register before issuing stablecoins.”
Interestingly, while the FSA recently ceded authority to Japan’s Virtual Currency Exchange Association (JVCEA) by granting the collective the authority to self-regulate Japan’s cryptocurrency exchanges, the JVCEA will not be able to regulate stablecoins as they have been determined to not be cryptocurrencies.
It appears that the task of regulating stablecoins to will fall to the FSA and regulators will need to analyze each stablecoin on an individual basis.
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