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Today, I would like to introduce the popular article "Stablecoin, Japan is also tightening regulations" of ASCII Club.
Jeremy Bezanger
On November 17, 2021, the Financial Services Agency published a report on how to deal with digital and decentralized finance.
This report is positioned as an "intermediate issue arrangement" of the study group, but it focuses on "correspondence to stablecoin, which requires urgent institutional response".
The U.S. government's move is behind the report's statement that urgent action is needed. The US government, a step ahead of the Japanese Financial Services Agency, released a report on Stablecoin on November 1, calling on Congress to put in place legislation to tighten regulations.
Since the Financial Services Agency also released the report immediately after the US government, it is natural to think that the Japanese government is likely to be in line with the US and to tighten regulations in the near future.
Review of stablecoin
As many of you may already be familiar with, there are several types of stablecoin. The report of the FSA study group is organized into the following two types.
So far, the type that "links with the value of legal tender" is predominant.
For example, when issuing a virtual currency for 1 yen for 1 coin and buying back the yen from the virtual currency, the aim is to trade at 1 coin = 1 yen. It is also called "legal tender collateral type".
Stablecoin with US dollars as collateral is the mainstream, and there are tethers and USD coins.
Stablecoins with Japanese yen as collateral, such as JPYC (JPY Coin), already exist.
The report describes fiat-backed stablecoin as follows:
"There is a possibility that remittance and payment methods that are widely used in society, like existing digital money, will emerge."
It should be noted that the study group has stated that stablecoin may become widely used.
It seems that the study group thinks that early tightening of regulations is necessary, including user protection, because it may be widely used in the future.
The issuer of stablecoin is "banking business"
The news about Stablecoin is always esoteric, but it's even harder from here on.
The report points out that for Stablecoin, the "issuer" and the "intermediary" may be different.
Transportation-related e-commerce such as Suica and ICOCA is issued by railway companies, and services that allow them to get on trains and use them for shopping are basically provided by railway companies.
On the other hand, for stablecoin, it is considered that there are many models in which the issuer and the intermediary exist separately.
The issuer issues stablecoin, receives funds from the user and exchanges them for stablecoin, or returns funds such as fiat currency at the request of the user.
The intermediary will provide a "wallet" (wallet) for storing stablecoins owned by users as an application, and will provide services that can be used for shopping.
The report stipulates that stablecoin issuers will be required to have a banking license or a fund transfer license, depending on the nature of the business.
Furthermore, when distributing stablecoins issued overseas in Japan, a banking license or a fund transfer business is required to be registered.
The term money transfer business is a little unfamiliar, but basically it refers to a business that provides services such as sending Japanese yen from Japan to overseas and receiving it in US dollars at the remittance destination.
Looking at the list of fund transfer companies registered with the Financial Services Agency, PayPay and LINE Pay are also included. Come to think of it, PayPay and LINE Pay allow you to send money to your family and acquaintances. It can be understood that registration of the fund transfer business is required to provide such services.
For intermediaries, multiple licenses and registrations may be required depending on the content of the services provided, such as the current crypto asset exchange company.
Please enjoy the continuation with "Stablecoin, the flow of tightening regulations in Japan".
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