Regulators Split on Stablecoin Paths: Stability vs. Speed

Japan’s cautious regulatory approach to stablecoins appears to be slowing the adoption of yen-backed tokens, despite the country having pioneered a comprehensive legal framework in 2023. While the U.S. is now advancing with the GENIUS Act, which seeks to open the market to both bank and non-bank entities, Japan’s restrictive licensing model—limiting issuance to banks, trust banks, and registered money transfer agents—has resulted in a limited number of active participants. As of now, no significant yen-stablecoin economy has emerged, even though several companies are preparing for potential market entry.

The philosophical difference between the two regulatory models is evident. Japan prioritizes systemic stability, requiring stablecoin issuance to be confined to established financial institutions. In contrast, the U.S. approach under the GENIUS Act encourages broader participation by allowing federally licensed non-banks to issue stablecoins, provided they meet compliance and reserve requirements. This more inclusive strategy could accelerate the U.S.’s position in the global stablecoin market, currently dominated by U.S.-dollar pegged tokens such as Tether’s USDT and Circle’s USDC.

Despite its early-mover advantage, Japan is still preparing for its first yen-backed stablecoin, expected to launch later this year. JPYC, a local fintech firm, is in the process of registering as a money transfer operator and will issue a fully collateralized stablecoin backed by bank deposits and Japanese government bonds. Another potential entrant, Monex Group, is also exploring a yen-pegged stablecoin backed by liquid assets. Monex, a publicly traded company with subsidiaries like Tradestation and Coincheck, could bring substantial credibility and scale to Japan’s emerging market, if its initiative is realized.

In parallel, Japanese financial infrastructure providers are pushing for broader adoption. Startale Group, for example, has partnered with SBI to develop a platform for tokenized stocks and real-world assets, aiming to provide 24/7 trading access and cross-border settlements. The firm also aims to enhance corporate use of stablecoins by improving liquidity and exploring applications like programmable treasuries for automated FX hedging and real-time capital allocation. These efforts reflect a broader industry shift toward leveraging stablecoins for enterprise-grade financial services.

The U.S., meanwhile, is witnessing increased scrutiny of the GENIUS Act, particularly its ban on stablecoin yields. According to a recent analysis by Stinson LLP Partner Tom Witherspoon, the act creates a federal framework for stablecoin issuance but leaves unresolved questions regarding its applicability under the Electronic Fund Transfer Act (EFTA). This legal ambiguity could affect consumer rights and liability protections in cases of fraud or unauthorized transactions. Witherspoon notes that the act preserves the ability of states to enforce their own consumer protection laws, which may lead to a patchwork of regulations across the U.S. as the market develops.

Japan’s infrastructure-first approach may still position it to compete as global regulatory frameworks mature. However, with the U.S. opening its market more broadly and introducing new players, the yen may struggle to gain traction in a space currently dominated by the U.S. dollar. The coming months will likely reveal whether Japan’s measured strategy can catch up or if the U.S. will solidify its lead in the global stablecoin economy.

Source: [1] Cointelegraph (https://cointelegraph.com/news/japan-wrotejapan-stablecoin-laws-vs-us-genius-act-adoption-gapthe-first-stablecoin-rulebook-so-why-is-the-us-pulling-ahead) [2] Stinson LLP (https://www.stinson.com/newsroom-news-witherspoon-examines-stablecoin-regulation-in-law360)