In a new development, Japanese regulators are now working to regulate the regulation of stablecoins and digital currencies. In exclusive coverage, Reuters reports that the Japanese government is closely monitoring the strong growth of the cryptocurrency market and remains concerned about its impact on the country’s financial system.

Japan is trying to regulate stablecoin regulation

Tokyo plans to work with global financial regulators to introduce stricter regulations on private digital currencies. The chief financial officers of the G7 and G20 have called for stronger regulation of fiat-linked digital currencies or so-called stablecoins.

Japan’s leading financial regulator (FSA) has set up a new department to oversee cryptocurrency regulations. This new entity will oversee a broader “decentralized finance” market. Hence, it will monitor all blockchain-based financial activities without central intermediaries.

The Japanese Ministry of Finance has also stepped up its efforts in this direction. “Japan can no longer leave things unattended as global developments in digital currencies are moving rapidly,” added the official.

The Bank of Japan has accelerated its efforts to get a digital yen. Earlier this month, the Bank of Japan said the digital yen will be clearer by the end of 2022. The central bank believes the digital yen is a safer alternative to private bookkeeping in payment transactions.

Not only Japan’s efforts to regulate stablecoin regulation, global regulators are targeting stablecoins as well

This Japanese development comes just a day after Federal Reserve Chairman Jerome Powell commented. The Fed chairman said that unlike banks, there is still a lack of a strong regulatory framework for regulating stablecoins. Powell also stated that too many stablecoins in the market will fragment the financial space.

If stablecoins are to exist in the financial sector, there must therefore be an adequate regulatory framework.

Last month, the Bank of England (BOE) said that stablecoins should be managed in the same way that banks handle payments.

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