Japan’s top financial regulator, the Financial Services Agency (FSA), is reportedly planning to propose legislation to restrict stablecoin issuance to banks and wire transfer companies. Crypto service providers involved in stablecoin transactions, including wallets, will also be brought under the financial regulator’s oversight.
Japan to Tighten Stablecoin Regulation
Japan’s Financial Services Agency (FSA) is planning to tighten the regulation of stablecoins by imposing strict rules on their issuers, Nikkei reported Monday, stating:
Financial Services Agency will propose legislation for 2022 that would limit the issuance of unstablecoins to banks or wire transfer businesses.
The FSA will also tighten regulations related to the prevention of money laundering, the publication added, noting that crypto service providers involved in stablecoin transactions, including wallets, will also be brought under the financial regulator’s oversight.
In addition, stablecoin issuers will be required to comply with Japan’s law on preventing transfers of criminal proceeds. It includes reporting suspicious transactions and verifying users’ identities.
As of the writing of this article, there is nearly $160 trillion in total stablecoin market capitalization. Based on data from Bitcoin.com Markets, Tether (USDT), which is the largest stablecoin currently in circulation has a market capitalization of $76.58 million.
Japan doesn’t have any law that regulates stablecoins at the moment. The FSA created a panel in order to examine ways to ensure consumers protection and reduce money laundering. In September, Yuri Okina, a member of the panel, said: “It’s important that stable coin is backed by secure, liquid assets. But it’s questionable whether setting blanket rules as strong as those currently applied to banks is the right approach.”
Japan isn’t the only country that plans to place strict regulations on stablecoin-issuers. In July, Treasury Secretary Janet Yellen asked regulators overseeing crypto assets in the U.S. to “act quickly” to regulate stablecoins. The President’s Working Group on Financial Markets (PWG) subsequently recommended imposing bank-like regulation on stablecoin issuers.
This regulatory approach is not for everyone. In November, Federal Reserve Board Governor Christopher Waller argued against the PWG’s recommendation. He said that while he supports banks being able to issue stablecoins and disagrees with banks having them, only banks should have the right.
How do you feel about Japan’s plans to let only wire transfer and banks issue stablecoins. Please comment below.
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