[NEWS] Revised Payment Services Act incorporating stable coins comes into effect. Compliance with the travel rule also begins

On the 1st, the revised Payment Services Act came into force, defining stablecoins as electronic payment methods. This will allow stablecoins backed by legal tender such as the Japanese yen or value to be issued.

The revised Payment Services Act also defines stablecoins as electronic payment methods, and there are hopes that they will be used in future payments between companies.

Stablecoins are issued with legal tender or gold as backing assets. Since they fluctuate at the same price as the backing assets, they are in demand as a means of payment and remittance compared to traditional crypto assets (virtual currencies), which are considered to be highly volatile.

Currently, stablecoins with high market capitalization such as Tether (USDT) and USD Coin (USDC) function as major trading pairs at various crypto asset exchanges.

In Japan, the revised Payment Services Act, which includes stablecoin regulations, was enacted in June last year. After that, in December of the same year, the government decided to allow the handling of stablecoins issued overseas, such as Tether.

Asset preservation will be carried out by distributors, not issuers. In addition, stable coins issued in Japan will be limited to three issuers: banks, trust companies, and fund transfer parties, and businesses in charge of distribution will be required to register.

Several banks and companies in Japan have already begun developing stable coins, and this movement is expected to accelerate in the future.

In relation to crypto assets, domestic crypto asset exchanges have begun responding to the "Travel Rule" proposed by the FATF (Financial Action Task Force).

The Travel Rule aims to prevent money laundering and terrorist financing, and involves the sharing of customer information. Specifically, crypto asset exchanges are required to notify the destination crypto asset exchange of information about the sender and recipient of the crypto asset.

In response to the Travel Rule, domestic crypto asset exchanges have also announced exchanges to which they cannot send crypto assets directly.

Coincheck and bitFlyer, which use "TRUST (Travel Rule Universal Solution Technology)" that complies with the Travel Rule, are no longer able to send or deposit crypto assets to crypto asset exchanges that do not support the system. This is due to a lack of compatibility between TRUST and other different notification systems.

In addition, restrictions will be imposed on sending and depositing cryptocurrencies other than those supported by TRUST. According to Coincheck's announcement, if you try to send Lisk (LSK) from the exchange to bitFlyer, you will not be able to send it because Lisk is a cryptocurrency that TRUST does not support.

The countries that are subject to notification by TRUST are 21 countries including Japan, such as the United States, Canada, and South Korea, and this restriction will be imposed on cryptocurrency exchanges that provide services in these countries.

On the other hand, sending to exchanges based in countries other than these 21 countries is currently possible.

With the enforcement of the revised Payment Services Act, which includes stablecoins, and the response to the travel rule, the environment surrounding domestic cryptocurrencies is likely to change significantly. Various announcements are expected to be made from time to time in various places in the future, so it is necessary to keep an eye on it.

Reference:Coincheck
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