Stablecoin issuer / redeemer in Japan
Issues a fiat-pegged stablecoin to the public, operates redemption, and holds reserves backing the float.
Stablecoin issuer is conditionally permitted in Japan with a local entity, subject to AML obligations and high licensing burden.
Verdict Details
- Permitted
- conditional
- Local entity required
- Yes
- Licensing burden
- High
- Last updated
- 2026-07-13
AML Obligations
- KYC/CDD obligations under the Payment Services Act (PSA) and aligned with FATF recommendations
- Transaction monitoring and suspicious activity reporting (SAR) to FSA/JFSA
- Comprehensive AML/CFT program required by FSA supervision for licensed entities
Key Restrictions
- Stablecoin issuance (EPI stablecoins) restricted to banks, trust companies, and fund transfer service providers — non-financial entities cannot directly issue
- 100% fiat reserve backing required for EPI stablecoins — no fractional reserve or non-fiat collateral permitted
- Redemption at face value must be guaranteed — stablecoin holders have a statutory right to redeem at par
- Stablecoin intermediation (exchange/transfer) requires separate fund transfer service provider registration
- Token must be classified as an 'EPI' (electronic payment instrument) under PSA Chapter III-2; if classified as crypto-asset (no guaranteed redemption), different regulatory framework applies
- Foreign-issued stablecoins used locally must comply with the same PSA Chapter III-2 regime — a locally licensed entity is likely required to intermediary the stablecoin
Key Risks
- Only banks, trust companies, and fund transfer service providers may issue EPI stablecoins — non-financial stablecoin issuers (e.g., standalone fintech) cannot license as such
- Regulatory framework effective June 2023 with refinements through 2024–2025 — some implementation details may still be in flux
- Foreign stablecoin issuers (e.g., Tether, Circle) face structural barriers — no clear 'foreign issuer' license pathway without a locally regulated intermediary
- Up to 55% miscellaneous income tax on crypto gains for individuals; corporate unrealized gains tax treatment adds complexity
- Stablecoin classification line between EPI and crypto-asset depends on redemption guarantee — issuers must ensure structural redemption rights to qualify as EPI
Evidence
This verdict synthesizes the following facts. Each fact links to its primary source(s).
EPI stablecoins: Fiat-backed with redemption at face value; regulated under PSA Chapter III-2.
Crypto-asset type: Lacks guaranteed redemption; subject to crypto-asset intermediary rules, with no issuer-specific regulation beyond user protection for handlers.
FSA outlined this in December 2022, with core rules effective June 2023 and refinements through 2024–2025.
Stablecoin Law (effective June 2023) (2023) — Electronic payment instruments — issuance restricted to banks, trust companies, fund transfer service providers. 100% fiat reserve required.
FSA/JFSA — CAESP registration, exchange oversight, stablecoin regulation, policy development
VASP: CAESP registration with FSA. JPY 10M (~$70K USD) minimum capital. Must maintain positive net assets. 100% cold storage recommended for customer assets. JVCEA membership mandatory. 6-18 month application timeline. Token listings pre-screened by JVCEA.
EXCHANGE: CAESP registration required. Margin trading capped at 2x leverage. Stablecoin intermediation requires separate fund transfer service provider registration.
Evidence fact jp.tax not found (may have been renamed).
Verdict Attribution
- Source:
- AI-Generated · Unreviewed
- AI synthesized:
- 2026-07-13 (deepseek-chat)
- Last updated:
- 2026-07-13
- Confidence:
- medium
This verdict was produced by an AI model from the underlying facts. Confirm with counsel before relying on it for material decisions.
Conditional — stablecoin issuance (EPI / fiat-backed with redemption guarantee) is permitted in Japan only by banks, trust companies, or fund transfer service providers under the Stablecoin Law (effective June 2023), requiring a high-burden licensing path with 100% fiat reserves, statutory redemption rights, and FSA supervision; foreign-issued stablecoins require a locally licensed intermediary to operate.
Questions this verdict aims to answer
- What e-money or banking license is required to issue?
- What reserve composition, segregation, and audit rules apply?
- What redemption rights must be granted to holders?
- Are foreign-issued stablecoins permitted for use locally?