Japan established the world's first comprehensive legal framework for fiat-backed stablecoins when its amended Payment Services Act (PSA) came into force on 1 June 2023. The framework represents a deliberate policy choice to regulate stablecoins as payment infrastructure under a new category called "Electronic Payment Instruments" (EPIs), positioning Japan ahead of both the EU and United States in stablecoin regulatory clarity.
After a regulatory overhaul via amendments to the Payment Services Act in June 2023, Japan launched formal stablecoin regulation: Only JPY-pegged stablecoins allowed, issuers must be licensed, reserves must be segregated and audited monthly, provide no yield, and redemption rights are guaranteed. The PSA was updated in March 2025, allowing 50% bonds/deposits in their reserves. The FSA has since approved the issuance of JPYC, the first yen-pegged stablecoin, by a licensed money transfer operator.
Applicable Laws:
Amendment to Payment Services Act: Stablecoin Legal Framework - https://practiceguides.chambers.com/practice-guides/fintech-2025/japan/trends-and-developments
First domestic yen-pegged stablecoin approvals (JPYC, RLUSD) - https://cointelegraph.com/news/japan-approves-first-yen-stablecoin-jpyc
