Japan is ramping up its digital currency and stablecoin regulation efforts as it seeks to catch up with its peers. The country’s financial services regulator has reportedly established a new unit that will oversee the industry, even as the Finance Ministry increases its headcount to better police the rapidly growing industry.
Japan was a pioneer in digital currency regulations and was one of the first countries globally to clearly define digital currencies’ role in its financial system. However, regulators in the country feel they have fallen behind their peers and are now seeking to catch up.
According to sources inside the country’s financial system, a number of government arms are increasing their focus on digital currencies.
One of these is the Financial Services Agency, Japan’s banking, exchanges and insurance watchdog. Speaking to Reuters, the sources revealed that the FSA has established a new section to oversee digital currency regulation.
The new section will also oversee decentralized finance, a sector that has seen an explosion in growth as well as an unfortunate rise in scams and crime.
Japan’s Ministry of Finance is also ramping up its efforts to oversee the digital currency industry. One of its efforts involves increasing headcount at an existing division to increase its digital currency oversight. The ministry will reportedly submit a budget request by next month for the increased staffers.
“Japan can no longer leave things unattended with global developments over digital currencies moving so rapidly,” one official commented.
The two institutions are working in tandem with the Bank of Japan, which is working on a digital yen. The central bank believes that the CBDC will give the public a safer alternative to digital currencies and stablecoins.
Japan joins several other regulators globally who are taking a keen interest in digital currencies as they express fears these could impact their financial stability. China is leading this front, cracking down on every other aspect of digital currencies, from the block reward miners to the over-the-counter trading platforms.
The People’s Bank of China has been hard at work on its digital yuan. Recently, it published the CBDC’s whitepaper in which it criticized digital currencies as “lacking intrinsic value, suffering from acute price fluctuations and having low trading efficiencies.” The PBoC wasn’t optimistic towards stablecoins either, claiming that they will “bring risks and challenges to the international monetary system, payment and clearing system, monetary policies, cross-border capital flow management and etc.”