JAPAN Trends and Developments Contributed by: Keiji Tonomura, Shu Sasaki, Kazuyuki Ohno and Otoki Shimizu, Nagashima Ohno & Tsunematsu
If such amendments are introduced, Trust Ben - eficiary Interest Stablecoins issuers will be able to invest a portion of the funds received from users in government bonds, potentially leading to improved profitability compared to the case in which funds are managed only through deposits. On the other hand, the proposed requirement that issuers contribute additional trust assets (see the last bullet point above) may necessi - tate the introduction of additional mechanisms to ensure its effectiveness. Some members of the experts’ panel suggested the introduction of mechanisms such as a guarantee and a daily valuation of trust assets. Depending on the final statutory provisions of the legislation to ensure the effectiveness of the obligation to contribute additional trust assets, issuers’ operations may be impacted. Therefore, the future discussions should be closely monitored. In addition, as mentioned above, under the cur - rent law, Trust Beneficiary Interest Stablecoins are excluded from the definition of “securities” under the FIEA. However, no direction has been given at this time as to whether Trust Benefi - ciary Interest Stablecoins incorporating govern - ment bonds, which are “securities” , would be excluded from the definition of “securities” under the FIEA. If Trust Beneficiary Interest Stablecoins were to constitute “securities” under the FIEA, issuers and intermediaries trading Trust Benefi - ciary Interest Stablecoins would be subject to compliance obligations under the FIEA, which could affect their operations and related licence. Furthermore, the accounting and tax treatment of Trust Beneficiary Interest Stablecoins that incorporate government bonds is expected to be discussed by the relevant authorities and organisations in the future. Therefore, these dis - cussions should also be closely monitored.
Issuance of “electronic payment instruments” by banks Although banks are not explicitly legally prohib - ited from issuing electronic payment instruments (other than Trust Beneficiary Interest Stable - coins), the JFSA has, generally, not permitted banks to issue them. The JFSA has explained that the purpose of this is to ensure that banks’ involvement in permissionless blockchain-based stablecoin is carefully considered in light of inter - national indications that such involvement may be incompatible with the prudent management of banks’ business operations. However, this does not preclude banks from issuing tokens for fund transfer (ie, “tokenised deposits” ). While banks are not permitted to issue stablecoins using permissionless block - chains, they are permitted to issue tokenised deposits if such tokens can only be transferred among identified users and the issuer (the bank, in this case) is involved in the transfer process. In light of this current situation, the JFSA dis - cussed whether banks should be allowed to issue electronic payment instruments. However, permitting banks to issue electronic payment instruments would effectively allow them to incur on-demand liabilities, which are different from deposit obligations. Therefore, it would be essential to carefully consider the impact of this on the soundness of banks and the financial system from various perspectives. The experts’ panel expressed the opinion that it is necessary to consider the impact of permitting banks to issue electronic payment instruments on their soundness and the financial system from a variety of perspectives. The panel also expressed the opinion that if banks were to issue electronic payment instruments that are different from deposits, it would necessitate the design
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