Mark Weaden
Japan's FSA increases diplomatic efforts on crypto regulation
The Japanese Financial Services Agency (FSA) is boosting its efforts to regulate the cryptocurrency market by establishing diplomatic ties with other regulators globally.
FSA wants to regulate the cryptocurrency market
FSA, the financial markets regulator in Japan, is ramping up efforts to regulate the cryptocurrency market globally. Sources close to the matter told Reuters earlier today the regulator is beefing up its diplomatic efforts in an effort to regulate the global crypto market.
One of the sources said, "Japan can no longer leave things unattended with global developments over digital currencies moving so rapidly." They added that the government is becoming increasingly worried that the new forms of private money could upend the financial system.
According to the report, Japan is currently playing catch up as other top regulators in the world are working on setting stricter rules on private digital currencies. Financial regulators from the Group of Seven industrial powers and the G20 economies are calling for greater regulation of cryptocurrencies, and most especially stablecoins.
Stablecoins are said to pose a threat to the current financial system since they are digital currencies whose values are tied to fiat currencies. Unlike the regular cryptos such as Bitcoin, the prices of stablecoins don't fluctuate as they are pegged 1:1 with the fiat currencies.
The FSA launched a new section last week to oversee digital currency regulation. The new section will be tasked with deepening dialogue with other leading regulators globally. The central banks and financial regulators are mostly concerned that the big tech companies boost their presence in the financial system by offering retail settlement platforms.
Facebook and its development of the DIEM stablecoin is a prime example. Formerly known as Libra, the project has faced strong objections from regulators and leaders globally, with Facebook ultimately delaying the project and later restructuring it.
The rise of stablecoins has also pushed central banks to start working on central bank digital currencies (CBDCs). The CBDCs are expected to serve as the digital version of the fiat currencies and ultimately kill the demand for stablecoins.
