Japan to reportedly take action to scrutinize crypto globally

Japan is strengthening its efforts to regulate digital currencies on a global scale, with related government authorities reportedly looking to expand staff to impose stricter rules.

Japanese regulators have expressed fresh concerns over the massive growth of the cryptocurrency market, particularly cautioning against stablecoins, Reuters reported on Friday.

Tokyo is willing to engage with global financial regulators to develop stricter rules for private digital currencies, three Japanese officials reportedly said, adding that G7 and G20 group regulators have called for greater regulations for fiat-pegged stablecoins.

“Japan can no longer leave things unattended with global developments over digital currencies moving so rapidly,” one official said.

According to the report, the Japanese Ministry of Finance is allegedly considering increasing staff to pursue its efforts to scrutinize the industry worldwide. The country’s Financial Services Agency (FSA) has reportedly already established a new unit to oversee digital currency regulation. 

Launched on July 8, the new FSA unit aims to monitor broader crypto markets and focus on decentralized finance, a blockchain-based form of finance that doesn’t rely on centralized financial intermediaries, the officials said.

Related: Japan’s finance industry awaits a clearer picture of the digital yen in 2022

The news comes amid the crypto industry drawing increased attention from global regulators recently. Many authorities particularly caution against stablecoins, a type of cryptocurrency pegged to assets or fiat currencies such as the United States dollar. Around the world, central banks have been specifically pushing central bank digital currencies (CBDC), digital versions of national fiat currencies, to maintain control over money.

U.S. Federal Reserve Chairman Jerome Powell said Wednesday that a U.S. CBDC would cut the need for private options like Bitcoin (BTC) and stablecoins. Last week, People’s Bank of China deputy governor Fan Yifei argued that the rapid development of private payment systems is “very alarming,” warning that stablecoins pose a serious threat to global financial and settlement systems.