The image is by Alex Castro.
The new restrictions would only allow banks and wire transfer services to issue stable coins.
A stable coin is a type of digital currency that is pegged to an external asset in order to keep it at a stable price. One example of a stable coin is tether. It was fined $41 million in October for making old claims that the token was backed 1-to-1 by its cash reserves.
Similar plans have been made in the US to regulate stable coins.
The country's Financial Services Agency plans to regulate stable coins in 2022, following similar plans in the US. The US Treasury Department encouraged Congress to pass legislation that would prevent other entities from issuing currency.
The Treasury says this will help prevent runs in which people start cashing out coins all at once in fear that the issuer of the currency may go under, potentially destabilizing other financial markets as a result. The Federal Reserve, Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency announced that they would clarify the rules and regulations surrounding cryptocurrencies in 2022.
The limitations on issuing stable coins are one of the things Japan's FSA intends to tighten. The agency will make wallet providers follow certain security protocols, like reporting any suspicious activity, and verify users' identities.
Japan plans on launching a currency in 2022. The currency will be backed by bank transactions and is supposed to expedite large transfers of funds between companies.
