The Japan Financial Services Agency (FSA) is working on the regulation of stablecoins, following in the footsteps of US regulators.
According to local news sources, the FSA plans to impose restrictions on stablecoin issuance to some financial institutions.
The FSA is considering limiting stablecoin issuance with banks and wire transfer companies, which is essential to protect client assets, as a way to reduce risk for users.
FSA officials said in a statement that they aim to stabilize the economy with restrictions on stablecoin issuance.
Confirming that they are inspired by the US regulatory framework, the FSA added that they will implement stablecoin legislation by next year.
Joerg Schmidt, Tokyo-based Strategy Director of B2C2, continued by stating that this move of the Japan FSA is in line with international developments:
“It seems that the FSA considers these constraints to be the most appropriate way to structure stablecoins. Issuers of such stablecoins will need to register as money transmitters or be licensed as banks.
But because banking regulations aren’t made with their stablecoins in mind, they don’t quite fit, and they come with their own set of problems. Therefore, the regulations need to be updated at some point in the not-too-distant future.”
The FSA also announced that it will tighten regulations to prevent money laundering.