The digital currency market is seeing changes daily, after the United States called for a regulation of stablecoins, Japan has followed suit by also requiring regulations be made for stablecoins.
Japanese officials are increasing up efforts to regulate digital currencies, particularly stablecoins, in recent development.
According to Reuters, the Japanese government is keeping a close eye on the cryptocurrency market’s rapid rise and is concerned about its impact on the country’s financial system.
Tokyo wants to join with international banking regulators to develop stronger regulations for private digital currencies. The G7 and G20 finance leaders have asked for more regulation of fiat-pegged digital currencies, often known as stablecoins.
The Financial Services Agency (FSA), Japan’s leading financial regulator, has created a new section to manage cryptocurrency regulation.
This new unit will be in charge of a larger market of “decentralized finance.” As a result, it will be in charge of all blockchain-based financial transactions that do not rely on central middlemen.
In a similar vein, Japan’s Finance Ministry has increased its efforts in this area. “With worldwide advancements in digital currencies advancing so quickly,” the official continued, “Japan can no longer leave things unattended.”
As a result of this development, the Bank of Japan has stepped up its efforts to develop the Digital Yen. The Bank of Japan announced earlier this month that by the end of 2022, the Digital Yen will have more clarity.
Digital Yen, according to the central bank, will be a safer alternative to private settlements.
This news from Japan came just one day after Federal Reserve Chairman Jerome Powell’s remarks. Stablecoins, unlike banks, do not yet have a strong regulatory structure, according to the Fed Chairman.
Powell also remarked that if there are too many stablecoins on the market, the financial space will become fragmented.
If stablecoins are to exist in the financial sphere, a solid regulatory framework is required. The Bank of England (BOE) stated last month that stablecoins should be regulated in the same manner that bank transfers are.