Japan

Overview

First major economy to regulate stablecoins as electronic payment instruments

The big picture: Japan amended the Payment Services Act in June 2023 to classify stablecoins as "electronic payment instruments" — making it the first major economy with a dedicated stablecoin law.

• Only licensed banks, fund transfer service providers, and trust companies may issue stablecoins
• Full 1:1 reserve backing required, restricted to bank deposits and government bonds
• Issuers must maintain the ability to redeem at par on demand
• Foreign stablecoins (including USDC and USDT) may circulate only through registered intermediaries

Between the lines: Distribution requires separate registration as an "electronic payment instrument exchange service provider" — creating a layered compliance architecture with distinct obligations at issuance, distribution, and custody stages.