Japanese regulators may consider restricting the algorithmic backing of stablecoins as a complement to the landmark legislation on stablecoin that was passed in June. This move is recommended by the Financial Service Agency (FSA) and was reaffirmed by Japan’s vice minister for international affairs Tomoko Amaya.
Amaya outlined Japan’s regulatory framework during his speech on cryptocurrency assets at a roundtable organised by the Official Monetary and Financial Institutions Forum (OMFIF), putting a focus on the elements of financial stability, user protection, and anti-money laundering/countering the financing of terrorism (AML/CFT). The talk was delivered in November, but the FSA only released the complete text on December 7.
The Banking Act, the Payment Services Act, and the Financial Instruments and Exchange Act, three important pieces of legislation, together make up the 29-page presentation that systematises the Japanese approach to cryptocurrency regulation.
While anyone who is well-acquainted with the Japanese regulatory landscape could not find anything new this time, the emphasis on distinguishing between “crypto assets” and “digital-money type stablecoins” gives a novel viewpoint on the local regulators’ approach to the latter.
Additionally, Amaya’s speech makes no mention of any specific deadlines or general themes for upcoming legislation. The Vice Minister does, however, refer to the FSA suggestions, which were allegedly made in October, in the “Way Forward” section towards the end of the document.
Given that algorithmic stablecoins are not covered by the existing stablecoins policy, which was approved by Parliament in June and will go into effect in June 2023, MPs will likely take this suggestion into account in the future.
The cryptocurrency markets experienced a sharp decrease following the collapse of the Terra tokens, which led to the algorithmic stablecoin Terra USD (UST) losing its 1:1 value to the US dollar in early May. This contributed to the arrival of the bill itself.
