Japan To Recognize Foreign Stablecoins As Electronic Payment Instruments Starting June 1

Japan’s key financial authority has expanded its framework to officially treat foreign trust‑issued stablecoins as electronic payment instruments instead of securities under domestic law.

The amendment, scheduled to take effect on June 1, 2026, will exclude qualified foreign trust beneficiary rights-based stablecoins from classification as “securities” under the Financial Instruments and Exchange Act (FIEA), allowing them to be handled by domestic operators registered as electronic payment instrument operators.

To achieve this, the Cabinet Office Ordinance established four requirements, including the legal status of stablecoin issuers, the management of underlying assets, measures to prevent criminal use, and currency denomination consistency.

Foreign stablecoin issuers must also manage reserve assets under applicable foreign laws and submit to audits by local professionals equivalent to certified public accountants or audit firms.

In addition, they must maintain systems to detect and respond to criminal misuse, including mechanisms to suspend transactions, and ensure the trust property and reserve assets are denominated in the same currency.

Notably, authorities will assess on a case-by-case basis whether a stablecoin can reliably be redeemed at its issue price to the same degree as Japanese electronic payment instruments. As a result, stablecoins used overseas may be treated differently in Japan depending on their reserve composition and audit arrangements.

Over the past few years, Japanese authorities have been working to restructure the treatment of crypto assets in the country. The latest changes to the Cabinet Order Ordinance have expanded Japan’s legal framework for stablecoins, established through the 2022 amendment to the Payment Services Act.

Last month, the FSA, alongside the Ministry of Land, Infrastructure, Transport and Tourism, the National Police Agency, and the Ministry of Finance, issued joint guidance outlining compliance requirements for the use of crypto in real estate deals.

The joint guidance outlined reporting obligations for cross-border payments, unlicensed transactions, or suspicious fund flows. Additionally, it warned firms that activities involving the exchange of crypto assets for fiat currency or brokerage services on behalf of clients may constitute crypto asset exchange operations, which carry the risk of legal violations.