The potential legal status of streaming at the Japan Financial Services Agency is unclear as the current law is silent on algorithmic stablecoins.
After passing its landmark stablecoin law in June, Japanese regulators are considering taking it further by restricting algorithmic support for stablecoins.
This initiative comes as a recommendation from the Financial Services Agency (FSA) and was reiterated by the Deputy Commissioner for International Affairs, Tomoko Amaya. During his speech on crypto assets at a roundtable organized by the Official Monetary and Financial Institutions Forum (OMFIF), Amaya provided Japan’s regulatory framework, focusing on the issues of financial stability, the protection of employees, and the fight against money laundering and money of terrorism. (LAB/CFT).
The case started in November, but the FSA released the document on December 7. The 29-page document sets out Japan’s approach to crypto regulation, which is made up of several key laws – the Banking Law, the Payment Services Law, and the Financial Instruments and Exchange Law. Anyone familiar with the Japanese regulatory environment does not see anything new at this time, although the focus on the difference between “crypto assets” and “digital money-like stablecoins” gives different opinions. and the approach of local authorities regarding the latter. Amaya’s statement also did not specify a date or name for future orders. However, at the end of the document, in the “Way Forward” section, the Deputy Minister quotes the advice of the FSA, which was said to have been made in October. As the saying goes:
“The proposed amendment states that ‘global stablecoins will not use algorithms to improve their value’ and strengthens the promise of redemption rights.”
It is likely that the legislature will consider this recommendation in the future, as the current stablecoin legislation, which the parliament passed in June will become law in June 2023, does not cover algorithmic stablecoins.
The fee itself came on the heels of a huge drop in the cryptocurrency market caused by the collapse of Terra tokens, and the algorithmic stablecoin Terra USD (UST) lost its value by 1:1 against the US dollar in early May.
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