Japan’s Financial Services Agency (FSA) advanced discussions this week on revising the Cabinet Order (内閣府令) governing foreign-issued stablecoins. This is the second round of legislative refinement targeting the grey zone of “how overseas-issued stablecoins can legally circulate within Japan,” following the amendment to the Payment Services Act in June 2023. According to the CoinPost weekly roundup, Japan’s market attention this week centered on three items: progress on the US Bitcoin reserve bill, the countdown to the next Bitcoin halving, and the FSA’s cabinet order revision. For USDT users, the third item is the one actually relevant to everyday card usage.
One frequently confused fact needs clarifying upfront: Japan currently does not prohibit holding USDT, and the FSA has never required exchanges to delist it. However, under Japan’s domestic “Electronic Payment Instruments (電子決済手段)” licensing framework, the stablecoins that Japanese-licensed institutions can issue and redeem for general users are currently limited mainly to JPYC and USDC (through channels such as SBI VC Trade). USDT issued by Tether is not on the approved list. The cabinet order revision under discussion concerns the specific rules around loosening versus tightening the threshold for foreign stablecoin circulation — not a binary decision to “open the gates” or “shut the door” on USDT.
Editorial Take · Practical Impact on USDT Card Users
The conclusion first: Japanese users holding USDT virtual cards, or users applying for a USDT card abroad using Japanese identity, do not need to take any action this week.
The compliance pressure point for USDT virtual cards has never been “whether USDT itself is legal in Japan,” but rather two specific junctures:
- Whether card issuers accept Japanese identity. MPCard (the editorially selected Asia Elite variant) currently allows KYC with a Japanese passport and Japanese address. Bybit Card in Japan operates through an overseas channel because Bybit Japan does not directly issue cards. This cabinet order revision does not directly affect either of these two channels, but it will influence whether card issuers are willing to explicitly list Japan as a supported region over the next 6–12 months.
- Merchant-side acquiring acceptance in Japan. Visa/Mastercard acquiring at Japanese merchants is a settlement-layer matter and is not directly tied to stablecoin regulation. In other words: even if USDT remains in a “semi-grey” status in Japan, using MPCard at convenience stores, for ChatGPT Plus subscriptions, or on Uber Japan still goes through the standard Visa channel — merchants never touch USDT.
Three time-window assessments:
- Within 7 days: No changes to any card-side services are expected. The revision is still in the public consultation stage.
- Within 30 days: Watch whether the FSA publishes a specific definition for “indirect circulation of stablecoins issued by foreign EMIs (Electronic Money Institutions).” This would have a downstream effect on overseas card issuers’ Japan market strategies.
- Within 90 days: If the cabinet order takes effect, cards such as Bitget Wallet Card that still list Japan as “limited” may reassess their position.
Historical Comparison: How This Differs from MiCAR and the 2023 Payment Services Act Amendment
The easiest comparison is the June 2023 amendment to Japan’s Payment Services Act — that revision created something from nothing by defining “Electronic Payment Instruments” for the first time, formally bringing stablecoins into the financial regulatory framework and explicitly permitting trust-type yen stablecoins (such as JPYC) and licensed overseas stablecoins to circulate. That was gate-opening legislation.
The current cabinet order revision is an adjustment at the implementation rule level, not new legislation. It is more analogous in character to the transition period following the EU’s MiCAR “non-compliant” determination for USDT at the end of 2024, when card issuers gradually migrated EU users from USDT cards to USDC/EURC cards — but Japan’s current approach is far more measured, with no explicit delisting timeline.
Another useful comparison is the USDC brief depeg event of March 2023. At the time, users holding USDC virtual cards experienced a chain of reactions within 48 hours: card issuers temporarily widened exchange rate buffers, and some exchanges suspended USDC deposits. The current Japanese cabinet order revision carries no depeg-risk signals whatsoever — it is a purely regulatory-path adjustment, and market reaction should be far more subdued than in 2023.
Regulatory / Compliance Boundaries: How to Understand Japan’s Current “USDT Grey Zone”
Referring to the site’s Japan Compliance Guide, Japan’s current legal status for USDT can be broken into three layers:
- Clearly permitted: Personal holdings, transfers between personal wallets, holding USDT in overseas exchange accounts. No restrictions apply here.
- Grey zone: Issuance of “USDT virtual cards” by Japan-domiciled entities to general users. No institution holding a Japanese EMI license currently does this. Overseas card issuers serving Japanese users do so through offshore legal relationships — theoretically compliant, but lacking explicit regulatory endorsement.
- Clearly restricted: Direct listing of USDT spot trading on Japan-domestic exchanges (still not open); Japanese companies using USDT as a legally authorized payment method to customers (not permitted).
The cabinet order revision primarily targets the middle layer. If you are a Japanese user holding a card issued overseas (in Hong Kong, Singapore, or Dubai), also consult Hong Kong Compliance and Singapore Compliance — both jurisdictions offer greater regulatory clarity on USDT cards than Japan does.
3 Milestones Worth Watching Going Forward
- FSA public consultation deadline: Cabinet order revisions typically carry a 30-day public comment period. Watch the FSA official website to see whether an English-language comment summary is published in June.
- First licensed foreign stablecoin issuer establishing a Japan presence: To date, USDC has achieved indirect compliance via the SBI route, but Tether still has no direct partner institution in Japan. Any change here would immediately affect the USDT card market structure.
- H2 2026 tax reform outline: The Ministry of Finance’s discussions on a separate capital gains tax rate for crypto assets (fixed 20%) may see progress in the autumn. This development would have a far greater impact on the practical return calculations for Japan’s Best Card Picks than the current cabinet order revision.
Editorial Recommendations
- Japanese users already holding a USDT card: No action required. Continue using your card normally. This revision does not signal any card-side service discontinuation.
- Users planning to apply for a new card: If direct KYC with Japanese identity is your priority, MPCard Review remains one of the most consistently accepting options on Asia-Pacific routes. This news does not constitute grounds to “put your application on hold.”
- High-net-worth users tracking compliance details: Consider waiting until the 30-day comment period ends before reviewing the final text of the revision. If your card spend is substantial (annual spend of $50k+), you may then need to reassess whether an offshore EMI route or a Japan-domestic Electronic Payment Instruments route better fits your tax structure.
In one sentence: This is not news about “Japan banning USDT” — it is news about “Japan continuing to refine the rules for overseas stablecoin circulation.” The distinction matters.