Japan’s growing concern regarding the financial system being invalidated due to the increasing number of cryptocurrencies in the market, is the reason authorities decided to strengthen their efforts to regulate digital currencies globally, three officials told Reuters.
The country is planning to take the help of global financial regulators to formulate stricter rules on cryptocurrencies. The financial bosses at G7 and G20 have called for stronger regulation for stablecoins, digital currency pegged to a national currency.
In order to regulate cryptos, the financial regulatory body of Japan, which is popularly known as the country’s Financial Services Agency (FSA), formed a new division to look after crypto regulations. However, the Ministry of Finance in the country has different aspects over the matter and it thinks to increase the staff of the agency.
“Japan can no longer leave things unattended with global developments over digital currencies moving so rapidly,” said an official.
As per the report, the government’s recent move is a complement to Japan’s central bank digital yen project.
The global regulators are worried about the increasing number of retail settlement platform operators because they are not regulated by traditional banking rules. If the operators start settling the payments using cryptocurrencies, then it would erode regulators’ grip on the financial regulation.
A month ago, the Bank of England released a statement specifying that if the stablecoins usage starts increasing globally, then the authorities should regulate its payment, in the same way, they handle banks’ payment.
One of the officials has recently informed that on July 08, Japan’s FSA started its new unit to oversee ‘decentralized finance.’ The agency also created a new position to head the section.
As per the officials, the finance ministry might increase the census at existing divisions of the agency to improve the supervision of cryptocurrency. For this, the ministry is planning to present a budget request by August.
FSA has recently, confirmed the introduction of a new section in the agency, but they have yet not decided anything about its operation.