Circle Sets Eyes On Japan for Stablecoin Launch

Updated: 06 July 2023

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What Circle is looking towards Japan for a potential dollar-pegged digital asset
Why The uncertain regulatory framework in the US is obliging cryptocurrency firms to look overseas
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Stablecoin issuer Circle is eying Japan for a dollar-pegged digital asset amid the ongoing regulatory turmoil in the United States.

During an interview with CoinDesk on Wednesday, Circle’s co-founder and CEO Jeremy Allaire said that Japan could grow into a big market if the use of stablecoins for international trade, related cross-border transactions, and worldwide commerce gains traction.

Demand for Digital Dollars On The Rise

Circle’s interest in the Asian nation comes after new rules governing stablecoins took effect on June 1.

Allaire asserted that demand for dollar-pegged digital assets is rising in “many markets,” but mostly in emerging markets like Southeast Asia.

Businesses are considering options that allow for stability and, at the same time, make online payments seamless.

Although Circle, which currently issues and develops USD Coin (USDC), is considering Japan, other contenders include Hong Kong, Singapore, and the UAE. However, the latest stablecoin bill further tips the scales in Japan’s favor.

“Japan has a long history of cross-border trade, foreign currency transactions, and global commerce,” Allaire added. “If stablecoins become more widely used for such purposes, we believe that Japan will become an extremely large market.”

According to the CEO, USDC is currently used in at least 190 countries, paving the way for Circle’s expansion plans into “large markets”.

Japan Is A ‘Very Attractive Market’ – Circle’s CEO Allaire

Japan stands out as one of the few countries with rules dedicated to governing stablecoins, which under the bill that took effect on June 1, have been accorded the “electronic payment method” status.

The guidelines foster an “excellent framework for governments and stablecoin issuers,” Allaire reckoned.

Allaire also took the opportunity to call upon Japanese businesses and financial services providers, crypto exchanges, as well as fintech companies to consider adopting USDC for their online transactions.

USDC is the fifth-largest cryptocurrency in the market and the second-largest stable coin behind Tether (USDT).

Circle’s stablecoin boasts approximately $28 billion in market capitalization and has, in the last 24 hours, witnessed $3.4 billion in trading volume.

Circle to issue stablecoin in Japan — USDC price chart | CoinMarketCap

Japan’s amended Fund Settlement Act has paved the way for financial institutions such as banks, trust banks, and fund transfer companies to issue stablecoins.

According to a related report by Watcher.Guru, Mitsubishi UFJ Financial Group (MUFG), Japan’s premier bank, is currently in dialogue with entities involved with major global stablecoins.

Concurrently, the bank is also contemplating the issuance of such tokens through its proprietary blockchain platform, Progmat.

Tatsuya Saito, the Vice President of Products, speculates that Japan might establish itself as a global center for stablecoin issuance.

“I am considering it very carefully. I think Japan could be a very attractive market for Circle.” Allaire said in response to a question on whether Circle is considering Japan.

Allaire did not specify if the potential stablecoin would be pegged to the yen or the dollar. He added that the company is evaluating demand and that “Yen-linked stablecoins will be a new opportunity.”

Stablecoin Issuers to Abide by Strict Rules

The revised Payment Services Act supports the issuance of stablecoins in Japan. However, issuers will be subjected to strict rules.

The bill stipulated that stablecoins must be pegged to either the yen or the dollar and assure holders of the right to redeem them at their nominal value.

Japan will only authorize approved financial entities such as accredited banks, registered fund transfer agencies, and trust corporations to issue stablecoins.

Circle was granted a Major Payment Institution (MPI) license to offer digital payment token services in Singapore, another Asian country, in early June.

The company received an in-principle approval in November from the Monetary Authority of Singapore (MAS).