Japan’s financial regulators can propose laws to restrict spending in 2022
The move comes because the Bank of Japan plans to launch a digital CBDC yen by the end of next year.
According to The Nihon Keizai Shimbun (Nikkei), one of the world’s largest financial newspapers and behind the Nikkei 225 stock index, the Japanese Financial Services Agency (FSA) will propose a law next year to restrict the issuance of stablecoin to remittance companies and banks only. . This would theoretically prevent companies like Tether (USDT), which does not act like a bank and is only regulated in the British Virgin Islands, from doing business with Japanese customers.
However, the proposed new rules will only affect some stablecoin issuers. For example, Circle, the issuer of USD Coin (USDC), plans to become a regulated crypto bank in the United States amid a regulatory crackdown. Despite operating only as private companies, stablecoin issuers are often exempt from financial reporting, audits, or regulatory oversight, leading to notable speculative claims that Tether may not have sufficient funds to support USDT.
In addition, the FSA plans to tighten regulations in areas such as preventing criminal transfers, verifying user identity and reporting suspicious transactions to both stablecoin issuers and wallet providers.
Private cryptocurrencies, no matter how innovative they may be, will be in direct competition with digital central bank currencies or CBDCs and their introduction. In Japan, the central bank plans to launch a digital yen called “DCJPY” by the end of next year. It is backed by a consortium of nearly 70 companies, including the country’s largest financial institutions, all of which took the DCJPY test. There is currently a stablecoin digital yen in circulation called the “GYEN” and another upcoming launch supported by Circle.