On May 19, 2026, the Financial Services Agency of Japan announced a revision of the Cabinet Office Ordinance, incorporating foreign trust-type dollar tokens that meet equivalence requirements into the regulatory framework for electronic payment means under the "Funds Settlement Act," set to take effect on June 1, 2026. The regulatory authority clearly stated that only products whose regulatory standards are comparable to Japan's and are subject to compliance assessments by Japanese operators qualify for this new channel. The official documents deliberately avoided listing specific names, leaving the inclusion of mainstream products such as USDT an unresolved question. Research briefs even specifically warned against simply interpreting this as “full legalization of all overseas dollar tokens in Japan.” Almost on the same timeline, in the capital markets on the other end, H&H International Investment, managed by Duan Yongping, made a subtle yet significant adjustment in the first quarter of 2026—by March 31, this portfolio, valued at approximately $20.004 billion with 19 securities, saw the addition of a crypto-related issuer for the first time: Circle, with a position valued at around $19.08 million, accounting for only about 0.1% of the portfolio. While the regulation opens a narrow but strict compliance channel for certain dollar tokens through the principle of equivalence, an account known for long-term value investment was quietly increasing its holdings in Nvidia and Pinduoduo while offloading Alibaba, and made a tentative allocation to Circle, exhibiting a misalignment of “limited opening + small position entry.” This marks the beginning of a new game regarding compliance dollar tokens, transitioning from purely technical issues to a negotiation between regulatory thresholds and traditional capital's patience.

Japan Allows Some Trust-Type Dollar Tokens

Under the original framework of the "Funds Settlement Act," Japan has strict definitions for "electronic settlement means," yet it has never clearly categorized overseas trust-type dollar tokens within any regulatory category—neither completely prohibiting nor formally acknowledging them. On May 19, 2026, the Financial Services Agency of Japan announced a revision to the Cabinet Office Ordinance, integrating "specific foreign trust-type electronic settlement means" into this system, effective from June 1, 2026. This means that if conditions are met, certain tokens denominated in dollars and operating through trust structures are legally permitted for the first time to provide services within Japan.

However, this door is not opened for all overseas dollar tokens at once. The amendment employs the principle of equivalence: for a foreign electronic settlement means to be deemed "equivalent," it must be regulated in its home country under conditions comparable to Japan. Only by crossing this threshold can it potentially be recognized as protected and constrained under the "Funds Settlement Act." The official document did not provide any specific token list, leaving whether mainstream products like USDT are included in the initial scope unanswered, and thus the market cannot simply interpret this revision as "complete legalization of overseas dollar tokens in Japan." In contrast, operators in Japan that accept, issue, or mediate such products are clearly required to assume compliance assessment responsibilities: they must independently determine whether the relevant tokens and the regulatory environment of their jurisdiction meet the "equivalent" standards to Japan, and based on this, undertake ongoing compliance obligations, making whether the products can enter Japan and by whom they will be received a long-term game surrounding equivalence standards and institutional risk preferences.

Equivalence Threshold and USDT Not on the List

For issuers wanting to bring dollar tokens into Japan, the inclusion of "equivalence" in the amendment erects a verification sign at the entrance that only regulators can read. The Financial Services Agency emphasizes in its statement that the handling of foreign electronic settlement means depends on whether the regulatory environment of their jurisdiction can be regarded as "equivalent" to Japan's, and cannot simply be deemed compliant because it has obtained a license or record overseas. The amendment further shifts responsibility back to the operators within Japan: those handling such products must conduct compliance assessments independently, rather than treating conclusions from foreign regulation as a free pass. This means equivalence is not just an abstract principle but a practical threshold for each dollar token's entry into Japan's "Funds Settlement Act" framework.

More intriguingly, the official document deliberately did not provide a "qualified list." The Financial Services Agency did not specify which particular dollar tokens can or cannot enter, leaving behind only principles and procedures. This forces every foreign trust-type dollar token wanting to provide services in Japan to proceed through a "case-by-case assessment" narrow door instead of enjoying an automatic inclusion pass. Market discussions quickly center on mainstream products like USDT: whether the regulatory arrangements of their jurisdictions are sufficient for Japan to recognize them as "equivalent" has become a core issue of private discussion among trading platforms, financial institutions, and compliance consultants. However, research briefs have clearly warned against inferring that "all overseas products have been fully legalized," as whether USDT meets equivalence requirements remains in the stage of waiting for an official stance, and this uncertainty itself is the most sensitive regulatory gap under Japan's new rules.

How Circle Connects to Japan's New Licensing Channel

After Japan's Financial Services Agency incorporated foreign trust-type electronic settlement means into the "Funds Settlement Act," issuers like Circle, which operates dollar-pegged tokens, saw a clear theoretical entry point formalized in the regulatory text: one end is "equivalence"—whether the regulatory framework of their home country can be recognized by Japan as comparable; the other end is "subject to regulation within Japan"—any operators dealing with such products in Japan must establish regulatory coordinates locally and assume compliance assessment responsibilities. For Circle, which has emphasized "embracing regulation," a market-derivable path might be to leverage the regulatory practices accumulated in other jurisdictions to provide compliance materials to Japanese operators, allowing them to apply for corresponding qualifications under the "Funds Settlement Act" and thereby demonstrate that Circle's dollar-pegged token meets equivalence standards.

Once this channel is traversed, every link in the chain is nailed down by Japan's anti-money laundering and KYC rules: local service providers must conduct reviews of customer identity and funding sources according to the "Funds Settlement Act" and anti-money laundering regulations, and disclose information regarding token structure, trust arrangements, and reserve management to regulators and users. Circle must cooperate by providing sufficiently transparent data and risk control processes to allow Japanese operators to dare to bear the legal responsibilities of “handling foreign electronic settlement means” in their own names. It is crucial to emphasize that research briefs do not provide official information indicating that Circle has obtained a license in Japan or confirmed a de facto entry path; the above model is more a theoretical deduction at the institutional and business levels. Whether it will eventually materialize will depend on how Japan's regulators specifically apply the equivalence principle and whether Circle is willing to bear the necessary local compliance costs for a new market.

Duan Yongping's Small Position in Circle: Value Investors Testing Compliance Dollar

If Japan's institutional design is viewed as "the track has been set up," who will step out first from the stands of the capital market becomes particularly important. Disclosure documents reveal that as of March 31, 2026, the account managed by Duan Yongping, H&H International Investment, has a total market value of about $20.004 billion, holding 19 securities, and for the first time includes Circle in Q1: the new position is valued at about $19.08 million, accounting for only about 0.1% of the portfolio. In the same quarter, this account increased its holdings in Nvidia and Pinduoduo while liquidating parts of its existing core holdings in Alibaba, raising the total number of holdings from 14 to 19, indicating a gentle adjustment and diversification. Circle is allocated a weight that can be "almost neglected," more like a sample placed in an experimental zone.

This contrasts sharply with Duan Yongping's previously restrained style. For many years, he has been renowned for long-term holdings in value stocks such as Apple and Berkshire, with the main thread of the portfolio remaining in traditional value and tech stocks, maintaining distance from crypto-related issuers. Now, at the time when Japan opens a regulated channel for foreign trust-type dollar tokens that meet equivalence requirements under the "Funds Settlement Act," this value investor chooses to give Circle a 0.1% position on the equity side, neither altering the value base of the portfolio nor using actual funds to observe whether a dollar token business can operate smoothly under the new regulatory framework. For him, it is more like a "regulatory trial position," with a very small risk exposure, standing at the entrance to the compliance track, to see if this path is worth increasing the stake in the future.

New Order of Compliance Dollar Tokens: Regulatory Template and Capital Queue

From the new regulations effective June 1, Japan has chosen a "limited opening + equivalence" route: under the "Funds Settlement Act," it provides a clear legal basis for foreign trust-type dollar tokens that meet equivalence requirements, while placing the review emphasis on whether overseas regulatory levels are comparable to Japan's, as well as the responsibility of Japanese operators to conduct self-compliance assessments for the products, rather than stamping approval on any overseas products. Research briefs also remind that this amendment should not be understood as “full release of all overseas dollar tokens in Japan,” as whether specific products like USDT can be included still awaits subsequent official statements and practical validation. On the regulatory side, a replicable template is being built—those willing to accept equivalence reviews and those willing to let Japanese operators bear compliance responsibilities will have opportunities to be included in the framework for electronic settlement means; while on the capital side, the current attitude only offers small experimental positions like H&H International Investment's approximately 0.1% stake in Circle to observe the true performance of businesses and market opportunities under new rules with very low weight. Moving forward, the variable lies in how Japan will refine equivalence standards, where the boundary lines for different dollar tokens will be drawn, and how many traditional institutions will choose to queue up to enter this track through equity investments or partnerships with licensed institutions. Under the dual screening of regulation and capital, the real competition will be who can occupy chips in this new order of compliance dollar tokens first within the rules.

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