Japan is gearing up its efforts to regulate digital currencies internationally, according to reports, as other economic powers race to push out their own, ‘more stable’, tech-based currency.
It is a sign that the Japanese government, alongside other G7 states, fear that the growing popularity of digital currency could rattle current financial systems beyond repair, Reuters first reported citing three officials close to the matter.
Tokyo has lagged behind in digital currency regulation, in comparison with neighbouring China and the UK.
“Japan can no longer leave things unattended with global developments over digital currencies moving so rapidly,” one official said.
The country just last week launched a new unit at its Financial Services Agency (FSA), which aims to oversee “decentralised finance”, blockchain-based finance that does not rely on central banks, the officials explained.
The new fintech unit will also help Japan deepen dialogue with regulators of fellow G7 countries and G20 economies which have also called for greater regulation of “stablecoins”, which is a type of cryptocurrency tied to a national currency.
Outside of the Japanese government, the Bank of Japan has been mulling its own stablecoins, a digital yen – a concept that has been gaining traction globally.
China’s central bank confirmed today that it will roll out pilot schemes to develop its own digital yuan, but has not yet put a timeline on the tech-based currency.
The People’s Bank of China aims to use its digital yuan primarily for domestic retail payments, while it explores cross-border payment pilot schemes.
The central bank cautioned that cryptocurrencies could threaten financial security and fuel money laundering schemes and other illegal economic activities.
The Bank of England said last month that stablecoins payments should be regulated in the same way as usual bank-handled payments if they start to become widely used.