Japan will implement new regulations

The  Japan Financial Services Agency (FSA) will propose to the Government of its country an increase in regulations related to the issuance of stablecoins such as USDT, from the company Tether, by 2022. If the ASF proposal is approved, the only entities that have the power to issue stable cryptocurrencies in Japan would be banks and payment and remittance platforms.

Institutions that have the support of the ASF against other conventional stablecoin issuers are required to comply with certain legal obligations. Among the requirements to implement procedures for Anti-money laundering and KYC customer identification policies.

Another obligation that financial entities such as banks and money transfer companies have in Japan is to have protection mechanisms for their clients’ assets. In this way, risks of loss of funds are minimized.

Although Japan’s financial authorities have been regulating the use of cryptocurrencies in its territory to a greater extent, there are several factors that cause it to pay some attention to stablecoins. One of these factors is the amount of money they move. Furthermore, tension in international markets has been growing due to different financial backing such as promissory notes.

Regulations on USDT wallets and other stablecoins

The issuance of stablecoins is not the only objective that the Japanese authorities intend to address. The ASF also intends to adjust regulatory measures for wallets and other intermediaries in transactions related to stablecoins. Which allows us to infer that exchanges would also be in the crosshairs.

The main premise of the ASF to take a step in this direction is the prevention of money laundering through cryptocurrencies such as USDT. To this end, the platforms that participate in the reception, sending and safekeeping of stablecoins; and must comply with identity verification procedures, in addition to reporting transactions that may be suspicious.

In this way, everything seems to indicate that those exchanges and wallets that already operate with stablecoins will be able to continue doing so, as long as they continue to comply with the requirements established by the ASF. However, for the issuers of this type of assets, all this is less optimistic. Despite everything, some companies will seek to adjust to the demands of the Japanese authorities within the established legal framework.

While this is happening, Japan continues to move towards having its own central bank digital currency. Last April, the Central Bank of this country began the digital yen tests. Although at the moment there are not many technical details about the type of network on which this currency will be found, it is a solution that many central banks in the world are analyzing and working on.

The union of Japanese megabanks

A consortium of about 70 Japanese companies, including the country’s largest financial institutions, have joined forces to begin testing and launching a new digital currency based on the digital yen in fiscal 2022. This new digital currency, called DCJPY will be backed by bank deposits and will depend on a common platform to expedite large transfers of funds and settlements between the companies that are part of it.

Different Japanese megabanks are present in this consortium, which work together to try to create an alternative to digital currencies and thus seek new payment and investment methods for Japanese users and investors.