The Financial Services Agency (FSA) of Japan recently presented some ideas about cryptocurrencies and stablecoins to the Payment Services Working Group of the Financial System Committee, mentioning its reluctance to allow banks other than trust banks to issue stablecoins. For stablecoins issued by trust banks, the FSA hopes to relax the current reserve requirements that require all assets to be held in the form of bank demand deposits. However, the FSA also hopes to implement travel rules that require KYC for stablecoin transfers issued by trust banks.
Japan passed stablecoin legislation in 2022, supporting banks, licensed remittance companies, and trust companies to issue stablecoins. As part of its working group presentation, the FSA distinguished between stablecoins issued on permissioned blockchains and those issued on public blockchains. It is satisfied that all three stablecoins exist on permissioned chains, but is cautious about allowing licensed deposit institutions to issue stablecoins on non-permissioned chains.