Japan to Introduce New Framework for Stablecoins, Protecting Investors from Risks
• The Financial Services Agency (FSA) in Japan has announced a draft system and guidelines for the circulation of stablecoins that are pegged on legal currencies like the USD, Pounds, etc.
• The new framework, which is expected to come into effect as early as 2023, will allow local crypto exchanges in Japan to distribute the stablecoins.
• The move is intended to protect investors and the entire financial system from risks associated with the rising adoption of stablecoins in Japan.
The Japanese government recently announced plans to lift the ban of foreign-issued stablecoins from being distributed in the country. This announcement came from the Financial Services Agency (FSA) in Japan, who proposed a draft system and guidelines for the circulation of stablecoins that are pegged to legal currencies like the USD, Pounds, etc.
This new framework is expected to come into effect as early as 2023, in conjunction with the revised Payment Services Act. When it is implemented, it will allow local crypto exchanges in Japan to distribute the stablecoins. This move is intended to protect investors and the entire financial system from risks associated with the rising adoption of stablecoins in Japan.
Japan has seen a massive growth in the adoption of stablecoins, with the market climbing to around 20 trillion yen. This has prompted the government to take action, as they want to protect investors from potential risks. The FSA has stated that the new framework will include stricter regulations on Anti-Money Laundering (AML).
The proposed framework will require that exchanges and other firms involved in the distribution of stablecoins will have to register with the FSA, and comply with all applicable AML laws. This could mean the introduction of additional measures, such as Know Your Customer (KYC) policies, to ensure the safety of investors.
The new framework is part of a larger effort by the Japanese government to regulate the crypto market. The government has recently introduced regulations on Initial Coin Offerings (ICOs), as well as requiring crypto exchanges to register with the government.
These moves are intended to ensure that the crypto market is safe and secure, while also protecting investors from potential risks. The government has also introduced tax laws that require crypto traders to report their gains, which is intended to increase transparency in the market.
The new framework is a major step forward for the crypto industry in Japan, as it could open up a new avenue for investors to access stablecoins. It could also make it easier for companies to issue new tokens, as they will no longer have to go through the complicated process of registering with the government.
Overall, the new framework will help to ensure that the crypto market in Japan is safe and secure, while also providing greater access to stablecoins. This could lead to increased adoption of stablecoins in the country, as well as increased investment opportunities for investors.