Japan will propose a law to limit the issuance of stablecoins next year
According to Nikkei, one of the largest financial newspapers in the world and behind the Nikkei 225 stock index, the Japan Financial Services Agency (FSA) will suggest Act next year to restrict stablecoins from being issued to remittance companies and banks.
This would theoretically prevent companies like Tether, 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 USDC, plans to become a regulated crypto bank in the United States amid regulatory crackdowns. 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 stablecoins, no matter how innovative they may be, are in direct competition with the digital currencies of the central banks (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 one stablecoin digital yen in circulation called the ‘GYEN’ and another pending launch operated by Circle.
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