Japan seeks full regulation of stablecoins through a new draft law.

Hello everyone...

Yesterday while browsing LeoFinance looking for content to comment and vote on, I came across the #MarketTalk post and someone who shared a comment talking about Terra having a lot of legal trouble to come. And while it is true that luna foundation is being investigated in South Korea for suspicious activities and also ordered to freeze luna foundation funds on South Korean exchanges, the reality is that so far no official statement has come out talking about the legal problems terra and its companies might face.

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But the problems do not only reach there, because, although terra foundation does not face any legal problems, the cryptographic system could face some problems of regularization or extreme surveillance, and well that is already being seen right now in Japan. There is a bill to limit the issuance of stablecoins to banks and trust companies. This is to avoid a collapse in the future like terra and thus harm investors.

This bill, stipulates that the issuance of stablecoins is limited only to licensed banks, registered money transfer agents and trust companies in Japan. In addition, it introduces a registration system for financial institutions issuing these digital assets to declare in detail all the stablecoins they issue and finally this bill establishes anti-money laundering measures.

In this way and with the laws applied from 2023, the aim is to protect investors in a very large emerging market, since according to estimates the stablecoin market in Japan is more than 20 trillion yen or more than $150 billion, so to protect the interests of all parties, more aggressive measures are being taken against stablecoins issued by companies that are not banks or authorized issuers.

But this is not the first time in Japan to seek to prevent the issuance of stablecoins by unauthorized companies, as in late 2021, Japan's FSA wanted to limit the issuance of stablecoins to authorized companies or domestic banks. Since the FSA was suspicious that actually tether had a physical or digital reserve of all the usdt it issues. But, although not much was accomplished it seems that this time if they are fully determined to enforce these laws against stablecoins companies like Tether, Coinbase or Binance.

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And the stablecoin market is not the only one in the sights of the Japanese regulators, as previously they also had in their sights the NFT, DeFi and everything that represents the cryptographic system, since according to the FSA all these money systems without regulatory control are highly dangerous.

My thoughts on this are divided, because on the one hand it is true that investors must be protected, since the projects must be solid and well supported to avoid being a fraud or to avoid massive capital flight as what happened with terra.

But at the same time these laws that are beginning to apply in Japan against companies that issue stablecoins generate a lot of distrust, since cryptocurrencies were born to stay away from the banking system or economic monopolization by a government or government entity, but this is returning to the same thing we have been seeing all our lives.

I know that this bill that started in Japan, will quickly spread to other countries, since the terra losses affected many people and this is the perfect excuse or the one that governments were looking for to act much faster in creating laws to impose more controls, regulations, laws and extreme surveillance of the crypto market.

That is why I think that projects like the ones we have here at Hive is what the market really needs, with solid controls and measures to avoid massive capital leakage and it is also totally decentralized. Too bad that, although Hive and its functions are widely known, but nobody wants to pay attention to them. The solution is here.

What do you think? Do you think this Japanese bill will negatively or positively affect the crypto market?

Let me know your opinion.

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