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Japan is ramping up its efforts to regulate crypto. This could hint at the government’s growing concern over the increasing use of private money such as stablecoins and their potential to disrupt the financial system.
“Japan can no longer leave things unattended with global developments over digital currencies moving so rapidly,” an unnamed official told Reuters. The unidentified party is one of three government officials who spoke to the publication on the condition of anonymity due to the sensitivity of the issue.
It appears that Tokyo regulators want to catch up with its international counterparts as the debate on crypto regulation heats up. Recently, the Group of Seven and the Group of 20 have called for greater regulation of stablecoins, which are cryptos pegged to other assets such as fiat.
The unnamed officials said that Japan’s Financial Services Agency (FSA) has formed a new section that will oversee crypto regulation. Meanwhile, the Ministry of Finance is also reportedly mulling on increasing staff. Both moves are seen as complementary to the Bank of Japan’s efforts as it experiments with the possibility of issuing its own digital yen, deemed a safer alternative to private settlement options.
Regulators are increasingly concerned about the growing presence of big-tech retail settlement platforms operators that might offer settlement options based on private cryptocurrencies. As these operators are not regulated by traditional banking rules, their increasing participation could erode regulators’ influence on the retail settlements sector.
FSA’s new unit was launched on July 8 and will oversee “decentralized finance.” Also known as DeFi, decentralized finance uses blockchain technology to offer financial services while removing intermediaries, which is touted for speeding up transaction settlements, lowering fees, and increasing transparency.
Meanwhile, the Ministry of Finance is planning to increase manpower to an existing division allowing it to increase oversight on crypto. Sources said that the ministry will submit a budget request by August.
