JAPAN Law and Practice Contributed by: Keisuke Hatano, Takeshi Nagase, Takato Fuki and Tomoaki Katayama, Anderson Mori & Tomotsune
6. Payments and Stablecoins 6.1 Payments
asset service providers (VASPs) must verify that such VASPs are conducting appropriate due diligence on users for AML/CFT purposes. 6.2.3 Backing Assets Trust banks and trust companies are eligible to issue stablecoins as trust-beneficial interests. Stable- coins of this type are classified as “Category III EPI”. The issuers of such stablecoins are responsible for redeeming them only to the extent of the value of the trust assets underlying the stablecoins. Accordingly, if the value of the trust assets decreases, the amount redeemable by holders of the stablecoins will corre- spondingly decline. To ensure continued linkage of the value of the relevant trust beneficial interests to legal tender and to secure redemption at face value, the relevant regulations before the 2025 amendment required that the entire amount of the reserve assets backing the specified trust beneficial interests be managed in demand deposits. However, since Japan introduced a regulatory frame- work for EPIs, other major jurisdictions, such as the United States and the European Union, have adopt- ed regulatory systems that allow the reserve assets underlying stablecoins to be held in instruments other than deposits, including government bonds. Conse- quently, the approach in Japan has been criticised as lacking balance relative to international standards. Considering these international developments, the 2025 amendment of the relevant regulations, which entered into force in 2026, allows reserve assets backing Category III EPIs to be managed, to a cer- tain extent, in government bonds and other securities prescribed by the relevant Cabinet Office Ordinance. 6.2.4 Special Considerations To date, no special considerations have been noticed in Japan. 7. Tokenisation and Real-World Assets 7.1 Treatment Several RWA token projects are currently in develop- ment in Japan, such as the “Sake World NFT”, which operates a marketplace for NFTs called “Sake Tickets” that are redeemable for Japanese sake and “NOT A
In Japan, if a monetary obligation is discharged by transferring crypto-assets, such discharge would be regarded as substitute performance under the Civil Code. There are no specific regulations applicable to substitute performance using crypto-assets. 6.2 Stablecoins 6.2.1 Fiat Currency and Algorithmic Stablecoins Stablecoins that can be redeemed in fiat currencies (also known as “fiat-backed stablecoins”) will be regu- lated as electronic payment instruments (EPIs). Non- fiat-backed stablecoins, such as DAI, are regarded as crypto-assets under Japanese regulations. 6.2.2 Stablecoin Regulation The previous Bill for the Amendment of the PSA was passed by the Diet and promulgated in June 2022, before it came into force on 1 June 2023. The amend- ments aimed at introducing new regulations on sta- blecoins. Under the relevant regulations: • stablecoins that are redeemable for fiat currencies (also known as fiat-backed stablecoins) will be regulated as EPIs. Non-fiat-backed stablecoins, such as DAI, will continue to be regarded as crypto assets; • persons permitted to issue EPIs directly to Japa- nese residents are limited to banks, funds transfer service providers, trust banks and trust companies that are licensed in Japan; • an entity that (a) sells or purchases EPIs, (b) acts as an intermediary, a broker or an agent for the issuance, sale and/or purchase of EPIs and/or (c) provides custody services of EPIs, as a business, is required to undergo licensing as an EPIESP; and • an EPIESP is subject to AML/CFT regulations, including the travel rule. More specifically, an EPISP is required to provide information on a customer’s identity when transfer- ring EPIs to any other EPIESP upon the customer’s instructions. Moreover, an EPIESP that continuously sends or receives EPIs to or from overseas virtual
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