Japan has proposed a law to ban stablecoins issued by companies like Circle and Tether if they don’t register. Learn more!
On Monday, Japan’s Financial Services Agency mentioned that they want to limit the issuance of stablecoins to banks and wire transfer companies. These plans are for 2022, as mentioned in the report published by Nikkei Asia.
According to FSA, limiting stablecoins issuance to wire transfer companies and banks will alleviate risks. Protecting customer assets is a legal obligation of such companies. This means that Tether needs to register as a bank or wire transfer company to issue stablecoin to Japan. The same obligations are in process in the US regulations.
On Tuesday afternoon, the total market cap of stablecoins was $160 billion. They had done a trading volume of $80 in the past 24 hours. The dominance of stablecoins is falling down this year. Despite that, Tether accounts for 50% of the stablecoin market, followed by USDC US Dollar Coin at 27% and BUSD Binance USD at 9%.
The US officials are investigating Tether to claim that all the stablecoins are backed by dollar reserves. Tether later mentioned that some of its reserves are commercial paper or short-term corporate debt.
The FSA is also in the process of bringing intermediaries in crypto transactions under its oversight, as mentioned in the report. These intermediaries are the wallets. Verifying the identity of their users and reporting nefarious activity to FDA is a legal requirement for these companies. Japan is hopeful of keeping money laundering at a minimum by following these steps.
