Japan’s financial regulator recommends restricting algostablecoins
Financial Services Agency of Japan (FSA) recommended to limit the use of algorithmic stablcoins in the country. This was said by the Vice-Minister of Foreign Affairs of the agency Tomoko Amaya.
The official specified that the recommendations apply to assets that could become “global stablcoins”. According to the FSA, the latter should not use algorithms to maintain the rate.
The agency noted that “stablecoins” are subject to the risk of bank panic. To eliminate it, regulators need to “take policy measures to ensure redemption at par and price stability.”
Amaya also emphasized the importance of oversight of custodial service providers, disclosure by digital asset issuers, and compliance by market participants with anti-money laundering and counterterrorist financing requirements.
The FSA’s approach to regulating Stablecoin and cryptocurrencies is based on existing legislation. There is no mention of algorithmic “stable coins,” but there is a distinction between “crypto-assets” and “stabelcoins of the digital money model.”
In June, Japan’s parliament passed a bill that recognized Stablecoins as digital money. It will take effect one year after its approval.