Recently, a number of Japanese officials have considered stablecoins (DAI, USDC, BUSD, USDT) to be a serious threat to the monetary network and financial stability of the nation. The local government has therefore decided to administer more stringent rules and regulations onto these stablecoins.
Elsewhere, the country’s Bank of Japan has plans of eventually introducing a CBDC in the form of a digital yen, which many in Japan actively believe to be a much safer and more viable long-term alternative as compared to cryptocurrencies. Japan is not the only country to think this way either, as others such as the Bahamas, Sweden, and even China have been working hard to also implement central bank digital currencies.
What’s next?
As aforementioned, the country’s officials shall be increasing strict regulations from this point forward in order to appropriately regulate various digital assets. This is because a few local officials claim that any digital asset which is directly pegged to any other fiat currency, in this case, the United States dollar, may very well end up potentially damaging the financial ecosystem of Japan as the yen is comparatively weaker.
One official had said that his country could ill afford to leave the situation as it currently is, with rapid worldwide developments occurring regarding digital assets and currencies. Furthermore, Japan’s FSA (Financial Services Agency) had formed a new division last week with the goal of supervising digital currencies and the corresponding regulations. The nation’s Ministry of Finance had additionally considered the need for adding more personnel to guarantee a smooth and seamless process.
Moreover, the new regulations might actually benefit the central bank. This is because as the bank is already working on introducing the abovementioned CBDC, more retail and Japanese institutional investors may feel increasingly comfortable with utilizing a digital currency backed by the local government instead of any stablecoin that the crypto industry can offer. The bank had already launched a kind of testing program which would help ascertain such a CBDC’s technical feasibility, so it is safe to assume that continuous progress is being made on this front.
China’s stance on stablecoins
China had also recently voiced concerns regarding stablecoins. Like its Asian counterpart, China believes that stablecoins may adversely affect the world’s overall financial infrastructure.
Fan Yifei had described these assets as mere ‘speculation tools’ that threaten the world’s social and financial security, as well as international payments, settlements, and monetary systems.
