Japan’s Financial Services Agency (FSA) is planning a legislative proposal for the upcoming year to restrict the issuance rights of stablecoins to banks and wire transfer companies, according to a Nikkei Asia report.
Fast facts
- The FSA’s decision to limit the issuance is meant to lower risks for stablecoin users, as FSA-authorized banks and wire transfer companies would have legal obligations to protect customer assets. The financial regulator may also impose stricter regulations on stablecoin transaction intermediaries such as wallet providers as an effort to curtail money laundering.
- This follows the U.S. President’s Working Group on Financial Markets’ report on stablecoins, which urged its Congress to apply the same regulatory standards and legal obligations as banks in order to “address risks to stablecoin users and guard against stablecoin runs.”
- In January 2021, JPYC Inc. released JPYCoin, a stablecoin backed by the Japanese yen. Just last month, U.S.-based Circle Ventures funded 500 million yen (around US$4.39 million) to JPYC’s Series A round, while a consortium of Japan’s 70 top-tier banks and companies are developing a bank deposit-backed digital currency scheduled to be launched in 2022.
- Meanwhile, political parties urged the Bank of Japan to speed up its CBDC (central bank digital currency) project to have it ready to be issued at anytime.