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Japan’s Financial Services Agency moves to impose a limitation on issuance of Stablecoins
Dec, 09 2021
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According to a report on Monday by Nikkei Asia, Japan's Financial Services Agency plans to restrict stablecoin issuance to banks and wire transfer companies in 2022.
The proposed law proposes
to ban companies like Tether and Circle from issuing stablecoins if they fail
to register.
Stablecoin issuance will be
limited by the FSA to minimize risks, given that banks are required to protect
customer assets by law and the agency intends to enhance money laundering
regulations to include oversight of wallet providers and others. Moreover,
additional know-your-customer (KYC) measures should be added.
Moreover, according to
Nikkei, Japan will introduce a new digital currency backed by bank deposits in
2022.
The digital yen, a central
bank digital currency (CBDC) that will work like bank deposits, will be tested
by over 70 major Japanese corporations, including Mitsubishi, starting in
January.
Tether's dominance has
begun to decline gradually over 2021, but Tether still represents 50% of the
stablecoin market. According to CoinGecko, stablecoins have a market
capitalization of $160 billion and have done $80 billion in trading over the
past 24 hours.
Various countries of the
world have differing opinions on stablecoin regulation, with two prominent U.S.
officials sparring over the topic in a Senate hearing.
Digital currencies like
stablecoins are pegged to external assets such as fiat money, gold, or other
investments in order to maintain a stable value.
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Pavan A
CBW - External Analyst
INDIA
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