Japan's Stablecoins Penetrate Convenience Stores and Banks, While South Korea Stalls on Regulation

[Block Media Reporter Oh Soo-hwan] Japan is expanding the use of stablecoins into offline payments and the broader financial system. By incorporating yen-based stablecoins and overseas-issued stablecoins into the regulatory framework, Japan is accelerating the establishment of a related ecosystem. In contrast, South Korea is struggling to gain momentum in issuing and utilizing stablecoins due to delays in relevant legislation.

According to industry sources on the 17th, Lawson, Japan's third-largest convenience store chain, will pilot a payment method using the yen-linked stablecoin JPYC in collaboration with digital asset wallet company HashPort at its Takagawa Gateway City store in Minato, Tokyo, starting in August.

Payments will be made by scanning a barcode displayed on the consumer's smartphone electronic wallet with a point-of-sale (POS) terminal. Lawson plans to decide on expansion after verifying the payment speed, system stability, and cost-saving effects compared to credit cards.

Not only Lawson, but the number of places utilizing stablecoins in Japan is steadily increasing. In February, Japan's second-largest credit card company, Mitsui Sumitomo Card (SMCC), conducted experiments with stablecoin payments using the My Number Card, a public identification card.

During the same period, Japanese payment company Digital Garage, international card company JCB, and financial group Resona Holdings consortium operated a pilot program for offline payments using USD Coin (USDC) and JPYC at JCB-affiliated stores in Shibuya, Tokyo.

In April this year, the okonomiyaki specialty restaurant Chibo introduced JPYC payments in some of its locations, and starting this month, JPYC can also be used at dental hospitals in Tokyo and Chiba Prefecture, as well as at beverage vending machines in the Kyoto area.

With the spread of retail payments, movements in Japan's financial sector have also intensified. Japan's three major megabanks—Mitsubishi UFJ Financial Group (MUFG), Mizuho Financial Group, and Sumitomo Mitsui Financial Group (SMBC)—signed a memorandum of understanding (MOU) in June for the joint issuance of yen-linked stablecoins.

They plan to prioritize the use of these stablecoins for corporate payments and cross-border remittances, aiming to commence commercial transactions within this fiscal year. There are also plans to expand their use as a payment method for stock and bond transactions in the future.

The proactive regulatory framework in Japan has enabled both the private sector and financial institutions to actively adopt stablecoins. Recently, Japan implemented sub-regulations under the Payment Services Act that outline the domestic circulation requirements for overseas-issued stablecoins, recognizing stablecoins that meet certain criteria as electronic payment methods.

As a result, a foundation has been established for yen-based stablecoins like JPYC and overseas-issued stablecoins like USD Coin (USDC) to form competitive and complementary relationships in the Japanese market. Japan is pursuing a 'two-track' strategy of nurturing yen-based stablecoins while incorporating overseas-issued stablecoins into the regulatory framework.

However, for overseas-issued stablecoins to circulate in Japan, they must meet requirements such as 100% segregation of reserve assets, guaranteed one-to-one redemption rights with fiat currency, and external accounting audits. Overseas issuers must hold qualified financial licenses in their home countries, and electronic payment service providers responsible for transactions in Japan are subject to verification obligations, including anti-money laundering (AML) regulations.

While Japan is taking the lead in market positioning through regulatory improvements, discussions surrounding the issuance and regulatory framework for won-based stablecoins in South Korea have made little progress.

The regulatory direction for overseas-issued stablecoins remains ambiguous, and stablecoins are not recognized as official payment methods under the Foreign Exchange Transaction Act. Additionally, delays in allowing corporations to issue real-name accounts for virtual assets have hindered the practical application of stablecoins in trade payments and other industrial settings.

Given this situation, there is a growing call for South Korea to expedite discussions on stablecoins to keep pace with the regulatory speed of major countries like the United States, the United Kingdom, and Hong Kong. Experts emphasize the urgent need to ensure consistency with existing foreign exchange regulations, such as the Foreign Exchange Transaction Act, while establishing a clear supervisory framework for the digital asset custody industry.

Seo Jeong-ho, a senior researcher at the Korea Financial Research Institute, stated, "Japan has built an ecosystem that fosters yen-based stablecoins while incorporating overseas-issued stablecoins into the regulatory framework to create competitive and complementary relationships. South Korea also needs to clarify regulations on overseas-issued stablecoins during the legislative process for the basic law and review consistency with related regulations like the Foreign Exchange Transaction Act."

He added, "Countries are designing stablecoin regulations by comprehensively considering the international status of their currencies and the need for foreign exchange management. Instead of basing domestic policy directions solely on a few overseas examples, it is necessary to design regulations that fit our financial market environment."

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