Stablecoins to face new restrictions in Japan

[Hydrogen]

Only banks, wire transfer companies would issue currency-backed coins like Tether

TOKYO -- Japan is acting to limit the number of issuers of cryptocurrencies like Tether, which are backed by such reserve assets as the dollar or the yen, joining the U.S. in moving toward tougher restrictions on a growing segment of finance, Nikkei has learned.

So-called stablecoins are often pegged to a fiat currency to prevent the kind of volatility associated with Bitcoin and other leading cryptocurrencies. The Financial Services Agency seeks to propose legislation in 2022 to restrict issuance of stablecoins to banks and wire transfer companies.

The debt crisis engulfing property developer China Evergrande has brought renewed attention to the claims of stability by these cryptocurrencies. Tether, the biggest stablecoin in circulation, is backed partly by commercial paper -- a type of short-term corporate debt. Under scrutiny, the company said in September that it did not hold any commercial paper or other debt issued by Evergrande.

"To address risks to stablecoin users and guard against stablecoin runs, legislation should require stablecoin issuers to be insured depository institutions, which are subject to appropriate supervision and regulation, at the depository institution and the holding company level," U.S. financial authorities including the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency wrote in a November report.

Japan's FSA sees limiting stablecoin issuance to banks and wire transfer companies, which are legally required to protect customer assets, as a way to lower the risk for coin users.

The market capitalization of stablecoins issued by the largest stablecoin issuers came to more than $127 billion as of October 2021, according to a figure cited in the U.S. report.

The FSA will also toughen regulations meant to prevent money laundering. Intermediaries like wallet providers involved in stablecoin transactions and management will be brought under the agency's oversight. They will also be required to meet obligations under Japan's law on preventing transfers of criminal proceeds, including verifying user identities and reporting suspicious transactions.

Stablecoins hold potential benefits for both businesses and consumers, allowing them to transfer money and pay for purchases at ultralow transaction costs.

A new digital currency backed by bank deposits is on track for launch in Japan as early as 2022, an effort that will involve the nation's top banks and about 70 other companies and organizations.

https://asia.nikkei.com/Spotlight/Cryptocurrencies/Stablecoins-to-face-new-restrictions-in-Japan

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Stablecoins have been under scrutiny since bitfinex tether 2017. Much has been alleged and published about the specific role stablecoins play in the cryptoeconomy. Without much being confirmed. I hope people remember the various things that have been said about stablecoins over the past 4 years. Past history is a great indication of what the future will resemble, as far as stablecoins go.

If current trends and campaign promises pan out, I would guess the President of el salvador will be offering excellent terms to stablecoins next.

I personally like stablecoins as a means of limiting purchasing volatility on the consumer side. Instant execution and dollar parity are great options for traders wanting to purchase bitcoin in higher sums.

Japan's motive for this move, would be an interesting thing to know. If indeed they are able to publicize reasons for it.

[fiulpro]

The regulations for stable coins are something that were bound to happen since the backup for most of the stable coins is already something that have been regulated since time immemorial. Therefore they are just extending it directly and not taking the indirect route.

Stable coins for me are essential to exchange and trade and other than that I would always prefer bitcoins over them, hands down. But seeing the governments take interest in them might be worthwhile since they would be functioning alongside CBDC's now.

Most big countries like the US have currently no regulations on the stable coins. But after Japan US as well is moving forth to bring these things to a regulatory environment, so we might be seeing some major changes but I do hope these changes would not be extremely agressive and people won't have to really pay immense amount of taxes causing probelms for them.

It was something that was supposed to happen sooner or later.

[Zilon]

So much effort is been put in by different countries to see to it crypto remains as centralized as possible. New restrictions on stable coins is a new approach to manage a fraction of crypto meaning Japanese would only be limited to centralized stable coin's either directly issued by the central banks or by authorized agencies or banks.

Since stable coins save investors from highly volatile coins like Bitcoin and a handy option for investors when pulling out from the volatility it's becoming a cause of interest by many as so much centralized stable coin exist meaning Japan can will only be limited to What they are offered

[Argoo]

States are slowly getting into their regulation and stablecoins. This is not to say that this is very unexpected. Japan has always been considered friendly to cryptocurrency and therefore there is no reason to believe that its government is stepping on cryptocurrency. This is just the next step in regulating them. Be aware that all private and commercial stablecoins will either follow strict regulatory guidelines or be banned.

[Hispo]

I have read from a friend that the ruling party of Japan is pretty much conservative and that would make sense considering this measure of stable coins.if I had to guess, I would say that (like the situation in the United States of America) the Japanese government is trying to clear the market so their CBDC has free pass when they decide to launch it among the people of Japan.

The government and the big banks of the conservative Japan want to have the monopoly of the money in their society and as a consequence, Tether and other stable coins have no place in their future model of economy. I must say I did not expect it from Japan. Let us see what happens next, I doubt they would do the same to Bitcoin, by the way.

[joniboini]

The government and the big banks of the conservative Japan want to have the monopoly of the money in their society and as a consequence, Tether and other stable coins have no place in their future model of economy. I must say I did not expect it from Japan. Let us see what happens next, I doubt they would do the same to Bitcoin, by the way.

I mean it should be expected. Stablecoins standing are shaky right now, we've seen many depeggings from various currencies and it allows the government to play a more central role to prevent it in the name of certainty. I doubt they'd explicitly remove other stablecoins as long as they can still control them to some extent, but it is clear that they'd prefer stablecoins that they can control just like what happens with fiat. Whether you want to rely on the government or a third party that has a sketchy background, using stablecoins to store your wealth will always be risky in the end.

[Flexystar]

I think stablecoin getting such restrictions is an obvious thing as they are backed up by security funds. In this case, it could be a dollar since it has to be a stable asset without which it voids the definition of stablecoins. Now since SEC has already regulated them and opted for securities, other nations would follow the same strategy.

I am not sure if it is stricter regulation OR actual enforcement of the law on stablecoins. Tomorrow it may happen that people like you and me put our whole and sole faith in such coins and save our life savings for a longer period and they end up with the collapses like FTX trivia.

I don't know. sometimes in some occasions, governments are following orderly laws and sometimes they are just off the roof.

Crypto has become a realm which is surprising in itself and there will never be a proper infra structure for the same.

[woez]

It should be kept in mind that past history can be a good indication of the future regarding stablecoins and their inclusion in the cryptocurrency market. It is true that Stablecoins have the potential to provide a more stable environment for both merchants and consumers, and their use can help limit volatility in the cryptocurrency market and Regarding the recent move by the President of El Salvador to offer very good terms for stablecoins I think there is still a need to see how the results will be in the future.

Well, this is interesting for Asian countries especially Japan. I think Japan's move is interesting to examine what its basic motives are even though Japan has been relatively open to cryptocurrencies and blockchain technology in the past. However, without an official statement from the Japanese government or regulator, it's difficult to say for sure.

[BIT-BENDER]

I am not sure if it is stricter regulation OR actual enforcement of the law on stablecoins. Tomorrow it may happen that people like you and me put our whole and sole faith in such coins and save our life savings for a longer period and they end up with the collapses like FTX trivia.

I think the USDC stablecoin and Silicon Valley bank case is a more relative example going my the topic already. Japan is a crypto-currency enthusiastic nation so there may be some sort of protection motive from the government.

The fact that stablecoin aren’t guaranteed been pegged on the US dollars an example is the USDC that got unpegged and the price plummet, this sort of situations are ugly and government with the citizens interest a heart would want to prevent that.

i think that is too much and japan is not worthy of being called a democratic country

We may be crypto-currency enthusiast but a country has the right right to place ban on things they have deliberated to be wrong and that does not make them less of a Democratic country take for example abortion is illegal in some countries and legal in other. Regardless the real issue is hard to place a ban on a decentralized entity.

[Ludmilla_rose1995]

it is their jurisdiction to be able to make proper regulation of things in their country and that includes stablecoins or cryptocurrencies circulating in their country and there is nothing wrong with that. but users also have the right to be able to determine which product is best for them. if these legislatures also plan to ban all forms of stablecoin circulating in their country outside of the issuer they appoint, i think that is too much and japan is not worthy of being called a democratic country

[KiaKia]

It is expected, Stablecoins must stay in the crypto space for trading purposes and tokens/pairs only and must in no way be use as money in the open world, with regulations kicking at the door it is definitely the right approach from the Japanese government, CBDC will be what stablecoin wanted to be, CBDC will be more embraced by the government, it's their digital coin but also a bad one for crypto users because I bet that every transaction will be known and trackable, I am somehow against CDBC because monitoring peoples lives is what the government knows best, it's their thing. It's left for crypto adopters to decide if they will really start using CBDC or not. As for me I don't want to have anything to do with CBDC.

[coupable]

Like you, I share the same enthusiasm for stablecoins in their classic sense.  The use of stablecoins as a trading instrument has made them a force capable of conquering new markets.  The problem began to appear with the development of smart contracts, so that most of these currencies became completely centralized, and its issuer could control its properties even after its launch, including freezing and burning.  Add to this the ease of manipulation of the supply, since stable currencies can be issued without a fixed cover of dollars, gold, or a source of value.

[tabas]

The government and the big banks of the conservative Japan want to have the monopoly of the money in their society and as a consequence, Tether and other stable coins have no place in their future model of economy. I must say I did not expect it from Japan. Let us see what happens next, I doubt they would do the same to Bitcoin, by the way.

I guess that's to be expected in a country where is about to develop their own CBDC. That's the main reason why they're making it and they don't want any interference whether some stable coins have been there stably being used by people globally. But then the main deal here is for them to introduce it to their own people and for them to have it used and that's why restrictions of its usage is a must and implement it so that people who got it will have to dump it and replace it with what's compliant to the government of Japan. They've got no control with Tether or any other stable coins that are there because it only shows that they are certain that they'll really have to implement its usage and its circulation should only lie into their economy and, could be soon be used outside their economy aiming the same purpose of USDT and of the same.

[Husires]

Japan almost follows the American financial policies, I should not be surprised that they issued restrictions similar to what happened in the United States of America, but I do not expect them to be as strict.

It seems that the new stablecoin will face many difficulties, and there may not be other stable currencies, and that decentralized models and other solutions that move away from banking systems will not be available, and therefore all future stable currencies will be a Trojan horse due to the fact that their accounts and assets will be bank deposits that are easy to regulate and ban it.


If an entity decides to create a decentralized stablecoin, how will it be fought? in this case i mean DAI

[DrBeer]

The topic of stablecoins is subtle. At least in whether there is a REAL security of crypto tokens issued by companies by issuers. And not only the reality of the collateral, but also the correspondence between the real volume of token emission and the real collateral.
And control and strict rules of work are necessary, otherwise stable coins will become new centers of new air, financial, bubbles. Which are guaranteed to burst, and the state will be forced to solve this problem with REAL money.

[slapper]

Japan almost follows the American financial policies, I should not be surprised that they issued restrictions similar to what happened in the United States of America, but I do not expect them to be as strict.

It seems that the new stablecoin will face many difficulties, and there may not be other stable currencies, and that decentralized models and other solutions that move away from banking systems will not be available, and therefore all future stable currencies will be a Trojan horse due to the fact that their accounts and assets will be bank deposits that are easy to regulate and ban it.


If an entity decides to create a decentralized stablecoin, how will it be fought? in this case i mean DAI

Stablecoins? It's like the gold rush all over again, people! Like a Jack-in-the-Box, but with coins and regulations? They just keep circling the drain. DAI and other decentralized coins may have advantages, but do they come without any dangers? They loom large.

Imagine that a mafia boss finds an independent stablecoin to be his heaven. Too few constraints? Uncertainty about the coin's long-term viability causes investors anxiety.

The key is... It's like attempting to juggle innovation and safety while walking a tightrope above Niagara Falls. Protecting citizens from the oncoming storm with cutting-edge technological measures. This is going to be one wild ride, but you won't regret it.

[Sithara007]

I don't have a good opinion about stablecoins. And therefore I don't care whether additional restrictions are being imposed on them or not. Take the most popular stablecoin as the prime example. Tether (USDT) is having a market cap of $81.5 billion and remains as the largest stablecoin in the world. But the promoters (iFinex Inc) have refused to conduct third party audits on the backup funds. And at times, they have admitted that only a small fraction of these reserve funds are held as cash or assets that are equivalent to cash. And this is the reason why they have faced legal action from the New York Attorney General office (NYAG), as well as from the United States Commodity Futures Trading Commission (CFTC). 

[Argoo]

I don't have a good opinion about stablecoins. And therefore I don't care whether additional restrictions are being imposed on them or not. Take the most popular stablecoin as the prime example. Tether (USDT) is having a market cap of $81.5 billion and remains as the largest stablecoin in the world. But the promoters (iFinex Inc) have refused to conduct third party audits on the backup funds. And at times, they have admitted that only a small fraction of these reserve funds are held as cash or assets that are equivalent to cash. And this is the reason why they have faced legal action from the New York Attorney General office (NYAG), as well as from the United States Commodity Futures Trading Commission (CFTC). 

Private and commercial fiat-backed stablecoins pose a hidden danger to the financial system of states. Any abuse with their release and use will harm the state, and if their market capitalization is several tens of billions of dollars, this will affect the global financial system as a whole. Therefore, it is not surprising that states will strictly regulate, and even prohibit the circulation of such stablecoins. And it is hardly surprising that Japan, which was among the first to legalize cryptocurrencies back in 2017, has a rather negative attitude towards stablecoins.

[DrBeer]

I don't have a good opinion about stablecoins. And therefore I don't care whether additional restrictions are being imposed on them or not. Take the most popular stablecoin as the prime example. Tether (USDT) is having a market cap of $81.5 billion and remains as the largest stablecoin in the world. But the promoters (iFinex Inc) have refused to conduct third party audits on the backup funds. And at times, they have admitted that only a small fraction of these reserve funds are held as cash or assets that are equivalent to cash. And this is the reason why they have faced legal action from the New York Attorney General office (NYAG), as well as from the United States Commodity Futures Trading Commission (CFTC).  

Private and commercial fiat-backed stablecoins pose a hidden danger to the financial system of states. Any abuse with their release and use will harm the state, and if their market capitalization is several tens of billions of dollars, this will affect the global financial system as a whole. Therefore, it is not surprising that states will strictly regulate, and even prohibit the circulation of such stablecoins. And it is hardly surprising that Japan, which was among the first to legalize cryptocurrencies back in 2017, has a rather negative attitude towards stablecoins.

The only possible harm to the state from stablecoins is the gap between the issued tokens and the supply. if there is a gap, the state has problems. Everything else is not critical, and maybe even beneficial. That is why, all countries are introducing strict control over the emission of stablecoins and their real backing with fiat currency, and constant monitoring and reporting of companies issuing tokens.

[FUCKBSVFUCK]

I don't They are a good alternative to fiat currencies. It's not like
 
But I'm not sure if they're going to be the first country to adopt bitcoin as a payment method. I think it's a good idea to have stablecoins in Japan.