Japan will ban stablecoin issuers if they don’t register: report

Japan will ban stablecoin issuers like Circle or Tether if they fail to register under the proposed new law. In today’s crypto news we read more about the new law.

According to a report by Nikkei Asia, the Japanese financial services authority plans to limit the issuance of stablecoins to banks and remittance companies in the next year. The FSA says restricting stablecoin issuance and the banks and remittance companies will help avoid risk as these companies have an obligation to protect customer assets. This means that companies like Tether cannot issue stablecoins for Japanese companies to use and use unless they are registered as a bank or remittance service provider, while Japanese regulators are also looking to the United States for similar inquiries.

Stablecoins have a total market capitalization of $ 160 billion and recorded a trading volume of $ 80 billion on the past day alone. Dominance has shrunk through 2021, with Tether taking 50% of the stablecoin market, followed by US Dollar Coin at 27% and Binance USD at 9%. Tether was under scrutiny by US officials for claiming stablecoins were backed by dollar reserves, but the company later said the reserves were actually contained in commercial papers or short-term corporate bonds. When Chinese real estate developer Evergrande struggled to repay debt with 171 domestic banks and 121 financial firms, Tether said it does not hold corporate debt.

According to Nikkei Asia, the FSA has planned to put cryptocurrency exchange intermediaries such as wallet providers to the test. Under the new regulations, Japan will ban unregistered stablecoin issuers and all companies that support the exchange will be required to verify users’ identities and report suspicious activity to the FSA. Meanwhile, it is rumored that a group of 70 Japanese companies as well as leading banks will test their own bank deposit-backed digital currency in 2022 with a test against a stablecoin called DCJPY starting this year.

The Digital Currency Forum is making an effort to involve MUFG Bank, Mitsui Banking Corp, Mizuho Bank, Japan Post Bank, Sumitomo, but the Central Bank of Japan and the FSA have announced that they will be present during the monitoring of the pilot phase.