Japanese financial regulator recommends restricting algorithmic stablecoins

The Financial Services Agency (FSA) of Japan has recommended restricting the use of algorithmic stablecoins within the country. This was stated by Tomoko Amaya, the agency’s Deputy Foreign Minister, рассказал.

The official noted that the recommendations apply to assets that could become “global stablecoins.” In the FSA’s view, the latter should not use algorithms to maintain a fixed exchange rate.

The agency noted that “stablecoins” are exposed to the risk of a bank run. To avert this, regulators should “take political measures to ensure redemption at par and price stability.”

Amaya also stressed the importance of oversight of custodial-service providers, disclosure by issuers of digital assets, and market participants’ compliance with anti-money-laundering and counter-terrorism financing rules.

The FSA’s approach to regulating stablecoins and crypto-assets is based on existing statutes. They do not mention algorithmic “stablecoins,” though there is a distinction between “crypto-assets” and “stablecoins modeled on digital money.”

In June, the Japanese Parliament passed a bill recognized stablecoins as digital money. It will come into effect one year after approval.

Earlier in October, authorities in the country amended six foreign-exchange laws as part of anti-money-laundering measures.

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