Japan’s main financial regulator, the Financial Services Agency (FSA), is considering proposing legislation to restrict the issuance of stablecoins to banks and wire transfer companies. Crypto service providers involved in stable transactions, including wallets, will also be placed under the supervision of the financial regulator.
Japan to tighten regulation of Stablecoin
The Japan Financial Services Agency (FSA) plans to strengthen the regulation of stablecoins by imposing strict rules on their issuers, Nikkei reported on Monday, saying:
The Financial Services Agency seeks to propose legislation in 2022 to restrict the issuance of stable coins to banks and wire transfer companies.
The FSA will also strengthen regulations relating to the prevention of money laundering, the publication added, noting that crypto service providers involved in stablecoin transactions, including wallets, will also be placed under the regulator’s oversight. financial.
In addition, issuers of stablecoins will be required to comply with Japan’s law on the prevention of transfer of proceeds of crime. This includes verifying the identity of users and reporting suspicious transactions.
The total market cap of all stablecoins at the time of writing is nearly $ 160 billion. Tether (USDT), the largest stablecoin in circulation, currently has a market cap of $ 76.58 billion based on data from Bitcoin.com Markets.
Although Japan currently does not have a law regulating stablecoins, the FSA has established an expert group to study how best to ensure consumer protection and address money laundering concerns in this domain. In September, panel member Yuri Okina said, “It is important that stablecoins are backed by liquid and secure assets. But it is questionable whether establishing general rules as strict as those currently applied to banks is the right approach. “
Japan is not the only country planning to impose strict rules on stablecoin issuers. In July, Treasury Secretary Janet Yellen called on regulators overseeing crypto assets in the United States to “act quickly” to regulate stablecoins. The President’s Financial Markets Task Force (PWG) subsequently recommended imposing banking-like regulations on issuers of stable coins.
However, not everyone agrees with this regulatory approach. In November, Federal Reserve Governor Christopher Waller spoke out against the PWG’s recommendation. He explained that he was okay with letting banks issue stablecoins, but disagreed that only banks should be allowed to issue them.
What do you think of Japan’s intention to only allow banks and wire transfer companies to issue stablecoins? Let us know in the comments section below.
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