Japan’s Financial Services Agency moves to impose a limitation on issuance of Stablecoins
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.
CBW - External Analyst