Japan’s Top Financial Regulator Planning to Limit Stablecoin Issuance to Banks & Wire Transfer Companies

Japan’s Top Financial Regulator Planning to Limit Stablecoin Issuance to Banks & Wire Transfer Companies

After the US, Japan is focusing on stablecoins and is acting to limit the number of companies that can issue these assets backed by fiat currency, according to a Nikkei report.

The country’s top banking regulator, Financial Services Agency (FSA), is reportedly planning to propose legislation next year to restrict the issuance of stablecoins to banks and wire transfer companies, which are legally required to protect customer assets.

The report cited China’s real estate giant Evergrande’s debt crisis bringing attention to the stability claims made by the stablecoins like USDT and USDC.

In September, as we reported, Tether and Circle came under scrutiny for holding commercial paper, but the former clarified that it doesn’t hold any commercial paper issued by Evergrande; rather, its vast majority of the commercial paper is in A-2 and above rated issuers.

The market cap and usage of stablecoins have exploded in popularity ever since last year. Their combined market cap now stands above $146 billion compared to just $29 bln at the beginning of this year.

Besides limiting the issuers, the FSA will also toughen regulations to prevent money laundering, as per the report. Intermediaries like wallet providers will further be brought under the agency’s oversight and required to meet obligations under the law on preventing transfers of criminal proceeds, including verifying user identities and reporting suspicious transactions, it added.

Meanwhile, in a November report, the US financial authorities, including OCC, the FDIC, and the Federal Reserve, called for stablecoin issuers to be insured depository institutions, which are subject to regulation and supervision.

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Author: AnTy

Ethereum is “Amazingly Positioned to Be A Central Part” of the Metaverse: Co-Founder Vitalik Buterin

Buterin is also in favor of DOGE’s 5 billion annual issuance, thinks more about the meme culture, is most surprised about NFT as an Ethereum use-case, and is most excited about ZK-SNARKs.

“I hope that doge can switch to PoS soon, perhaps using ethereum code,” said Ethereum co-founder Vitalik Buterin in response to Three Arrows Capital CEO and co-founder Su Zhu’s question about promising ideas for Ethereum / DOGE cooperation.

Zhu also asked Buterin what made him interested in the popular meme coin, which has the support of Tesla CEO Elon Musk, late on Tuesday after Buterin ran a “random Twitter experiment” where only the people he follows can ask him about anything crypto or non-crypto related.

Further talking about Dogecoin, Buterin said he favors DOGE’s supply emission, 5 billion per year annual PoW issuance. Instead of canceling it out, Buterin said, it should be put “in some kind of DAO that funds global public goods. Would fit well with dogecoin’s non-greedy wholesome ethos.” DOGE 0.92% Dogecoin / USD DOGEUSD $ 0.28
Volume 1.7 b Change $0.00 Open $0.28 Circulating 131.1 b Market Cap 36.85 b
8 h Ethereum is “Amazingly Positioned to Be A Central Part” of the Metaverse: Co-Founder Vitalik Buterin 1 d $4 Million Meme Coin “Doge” NFT Being Sold in Billions of Fractions on SushiSwap’s MISO 6 d Lake County Illinois Treasurer Accepts Campaign Contributions in Multiple Cryptocurrencies

During this Twitter Q&A, he further shared that he thinks “much more about the ecosystem of discussion and spread of memes / culture / ideas” instead of the market of resources, property rights, and trade, which was his focus a decade ago.

The Metaverse

When asked about the hardest lesson he learned through the Ethereum experience, Buterin shared that “People are harder to tightly coordinate in small groups than I expected. You can’t just get everyone to sit around in a circle, see each other’s inherent goodness and get along, especially when huge incentive conflicts are at play.”

His biggest non-technical regret in his Ethereum journey was the cryptocurrency’s composition of eight co-founders and “choosing them so quickly and nondiscriminately.”

Technically, he had an insane amount of confidence that “Ethereum will move to proof of stake within 1-2 years,” which turned out to be dead wrong.

As for which Ethereum use-case has surprised him the most, it’s non-fungible tokens (NFTs) which are currently taking over the crypto industry and driving usage on Ethereum blockchain right now, resulting in an increasing amount of ETH paid in fees getting burned.

According to him, Ethereum is “amazingly positioned to be a central part” of the Metaverse, defined as the internet plus shared state so that objects can be moved between platforms.

Overall in crypto, the ENS ecosystem — Ethereum Name service that gives web3 username for all of your cryptocurrency addresses and decentralized websites — and the whole concept of users and objects having cross-platform names is an obvious application that people just don’t get yet, he said.

The Future

The latest research that has Buterin excited the most is ZK-SNARKs, an acronym for “Zero-Knowledge Succinct Non-Interactive Argument of Knowledge,” which is cryptographic proof that allows one party to prove it possesses certain information without revealing that information. It basically requires no interaction between the prover and verifier.

“ZK-SNARKs getting powerful so quickly to the point that a full-on SNARKed EVM is not so far away is definitely exciting.”

ZK-SNARKs are also the privacy-preserving technology that he thinks will be the most widely adopted one 30 years in the future. Buterin expects it to be “a significant revolution as they permeate the mainstream world over the next 10-20 years.”

The second-largest network is shifting towards proof-of-stake (PoS), a less energy-intensive consensus narcissism than proof-of-work (PoW); once the merge is on mainnet, account abstraction statelessness and sharding will be high priority protocol upgrades, according to Buterin.

Also, crypto switching to PoS is only a small part of the solution, “ultimately we also need lots of very smart people contributing to longer-term fixes,” said Buterin, mentioning solar power, fusion, carbon capture, and sprinkling dust into the atmosphere. Overall, Buterin “definitely,” thinks that

“the crypto space needs to think hard about how it can be positive-sum toward more existing stakeholders to win more friends.”

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Author: AnTy

Japan’s Central Bank to Prioritize the Development and Potential Issuance of the Digital Yen

  • The Bank of Japan has unveiled plans to zero in on the possible development and issuance of their own Central Bank Digital Currency (CBDC).
  • This has most likely been triggered by China’s efforts to developing its digital Yuan.

News has surfaced that the Japanese Central Bank will now focus their efforts on the development of the digital Yen. This is a there is growing concern that China might beat them by issuing the CBDC first.

Takeshi Kimura, departmental Director General at the BOJ, has reiterated that the Central Bank is still in talks about increasing their scope to past the preliminary phase. This was during his Q&A with a local Japanese news outlet. He indicated the probability of collaborating with the private sector, which may be knowledgeable about such projects. He was, however, not keen to put a timeline on the test runs.

According to Kimura, the digital Yen must constitute of two major attributes: Universal access and be resilient. The digital Yen must be accessible to everyone as it is with the local fiat currency. It must also be resilient and be available at all times, even in the face of calamities that may lead to power outages. He remarked that the reduction in the circulation of the digital yen would mark the consolidation of the digital currency era, further necessitating the urgency for a CBDC.

Notably, China’s push for the CBDC may have rattled other jurisdictions leading to a sudden need for their own CBDC’s. Various Central Banks such as Bank of Thailand have announced test-runs for their CBDC, the digital Baht. This June, an LDP policy committee put forward a dossier labeling China’s head start in the CBDC race as a threat to National security.

China’s own need for the digital Yuan may have been sparked off by the announcement of the ambitious Libra project. Although there is no launch date for the digital Yuan, they have made inroads into the project. Recently the former PBOC Vice-Chair, Wang Zhongmin, declared that they had already completed the backend infrastructure for the digital Yuan, which is an impressive feat in any CBDC initiative.

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Author: Lujan Odera

NYDFS To Ease Bitlicense Approval Process as the Crypto Regulation Turns Five

The New York Department of Financial Services (NYDFS) has suggested modifications to Bitlicense’s issuance to make the state more crypto-friendly.

This license – introduced in 2015 – is now five years old, and has dramatically impacted crypto operations in New York since its introduction. While most crypto businesses view it as an obstacle, some companies find it to be within an achievable scope for compliance.

Currently, only 25 crypto firms have been approved by the NYDFS to carry out business in the big apple. The approval might, however, change given new proposals that seek to introduce conditional licenses and self-certifications as part of smoothening the approval process.

Going forward, crypto entities such as Bitfinex and Shapeshift, which terminated their New York operations following the Bitlicense roll out could make a gradual return to the lucrative market.

Conditional Bitlicense

This initiative will allow crypto firms looking to enter the New York market to obtain a conditional license by working with entities whose Bitlicense was already approved. According to the NYDFS’ logic, a firm that gets a provisional license will eventually seek the Bitlicense as it scales operations:

“DFS expects that an entity that seeks a Conditional License will endeavor to eventually seek and obtain a full BitLicense.”

Consequently, the new market entrants must document their intention to work with a Bitlicense holder. This will then be reviewed by the NYDFS coupled with a follow-up should an entity be granted the conditional license. In the event where a provisional license holder goes astray, NYDFS can step in to discontinue the approval.


To further advance its impact, the NYDFS has introduced a guideline on self-certification for crypto assets that are still in the pipeline.

However, this only applies to licensed entities and will need the approval of at least three firms to self-certify that a crypto asset meets NYDFS rules. Linda Lacewell, an NYDFS Superintendent, said that this move is meant to boost crypto businesses while maintaining proper oversight:

“We want to regulate … as much as we have to and not a drop more because businesses need to do business and they need to operate.”

State of Crypto Business in New York

As mentioned earlier, the Bitlicense has significantly shaped New York’s crypto ecosystem. Notable players that currently operate under the ‘strict’ measures include Circle, BitFlyer, and Bitstamp.

According to BitFlyer’s Chief Compliance in the U.S, Dave Zacks, the approval process was, however, not easy and took almost a year:

“We don’t know how many applications NYDFS has under review currently, but the requirements are strict, and a lot of newer smaller entities don’t have the capital or capability to meet those standards.”

Nonetheless, crypto stakeholders eyeing the New York market can now try their luck with better odds. Such a move would not only be beneficial in terms of market share but also in building a trustworthy business having qualified to operate in the world’s financial hub.

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Author: Edwin Munyui

Fintech Startup Yield To Roll Out Tokenized Zero-Coupon Bonds Using ERC20-Based yTokens

Yield, a fintech startup is developing a new protocol for the Ethereum network on the issuance of fixed-rate lending and borrowing. In traditional finance, such issuance is called a zero-coupon bond, where the buyer can only cash out once the bond reaches its maturity stage and they are guaranteed to receive a higher amount than what they invested.

Yield’s first product would be called yTokens or yDAI, an ERC-20 token which would be used to issue tokenized zero-coupon bonds. Yield’s CEO Allen Niemerg believes zero-coupon bonds is the need of the hour for Ethereum and it would be a novel primitive which can be further implemented in other systems too.

The Defi ecosystem has emerged as a viable lending and borrowing option for many where people put their crypto in collateral using smart contracts and withdraw loans in stablecoins. The borrower can always take out their collectivized crypto asset, but they are required to return the borrowed loan along with the interest rates. As the popularity and demand for the collectivized loan in defi soared, so did the interest rates.

For example, MakerDAO’s stability fee was at 0.5%at the start of the year and it has peaked to 20.5% by now. Thus, something like fixed-rate borrowing and lending would really help the ecosystem become more accessible and viable.

The zero-coupon bonds would provide the exact future projection about the cost of capital for investors. Niemerg described Yield as,

“a standard for a token that settles based on the value of a target asset on a specified future date, and which is backed by some quantity of a collateral asset.”

Yield became the first company to be incubated by blockchain research firm Paradigm and they also announced a seed funding which will be utilized by the startup to develop their first product called YTokens.

How Do yTokens Work?

yTokens will be an ERC-20 token which would act as a bridge currency for people to access zero-coupon bonds. Users can deposit their collateral in a vault governed by smart contracts and in return mint the yTokens. During the starting phase, users can deposit Ether as collateral and the borrowers can issue these tokens with different redeemable time periods ranging from a week to a month and even a year. These tokens will be fungible and would trade at a floating price.

Once the maturity period of the bond expires the collateralized ETH would be automatically transferred to the vault of the user. The CEO also revealed that they are developing a mechanism that can liquidate uncollateralized vault which could occur due to a sudden drop in the price of the collateralized asset.

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Author: James W

Maximum Issuance Of Ethereum to Drop 50% After the ETH 2.0 Launch: Vitalik Buterin

  • Ethereum monetary policies i.e. the minimum necessary issuance (MNI) troubles raises the need for the EIP 1559 proposal.
  • Ethereum 2.0 sets sights on reducing the issuance rate to under 2 million ETH, Vitalik Buterin says.
  • Minimum staking requirements for the ‘Phase 0 launch’ set to boost ETH prices.

Ethereum’s varying inflation rates due to Minimum Necessary Issuance (MNI), raising questions from the community as ETH 2.0 Phase 0 heads into launch. The second-largest blockchain employs a different rewarding structure from Bitcoin’s fixed supply rate; determining the minimum issuance rate as its difficulty bomb adjusts.

While the MNI ensures security on the network, several questions regarding the objectivity in determining the minimum rate and long term survival of the blockchain without continual forking have been raised.

In a recent podcast, Ethereum’s co-founder, Vitalik Buterin, answered these questions on the MNI, stating the mechanism ensures issuance and price of ETH remain at a “reasonable cost” in the long term. He said,

“In the longer term, a minimal viable issuance is an explanation for why the parameters like issuance are set up – it seems empirical that these parameters can motivate particular amounts of Ether to be sticking at a reasonable cost.”

ETH 2.0: Inflation set to Drop by 50%

Vitalik believes that the solution to high inflation will be quickly solved with the launch of Ethereum 2.0 Phase 0, expected in less than two months. In the podcast, Vitalik explained that the new proof-of-stake (PoS) mechanism will lower the inflation rate by over 50% despite the MNI remaining variable.

“One of the reasons why we’re doing Proof of Stake is because we want to greatly reduce the issuance. So in the specs for ETH 2.0 I think we have put out a calculation that the theoretical maximum issuance would be something like 2 million a year if literally everyone participates.”

Furthermore, Vitalik claims there is a good chance that the staking process will lower the inflation rate to only 1 million ETH tokens per year.

ETH Steady Rise to Continue Following PoS Launch?

Ether’s price skyrocketed past $200 last week as potential stakers filled their bags to reach the 32 ETH minimum limit needed to stake on the blockchain. Stakers will earn around 4-5% returns on their investments per year to keep transactions safe on the blockchain.

Adam Cochran, a partner at MetaCartel Ventures, said the ETH supply may see a huge reduction following the staking and buying frenzy. He estimated that 10 to 30 million Ether could be taken off the open market and with the supply rate dipping 50% following the launch of ETH 2.0, ETH price may appreciate significantly.

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Author: Lujan Odera

German Financial Watchdog (BaFin) Approves Fundament’s $280 Million Token Offering


Germany-based end-to-end security issuance solution for asset tokenization, Fundament Group has received approval from the country’s Financial Market Supervisory Authority (BaFin) to distribute real estate bond within the country.

The regulatory approval reportedly will enable the startup company to issue a proposed €250 million ($280 million) bond, that will be backed by a portfolio of properties in major cities across Germany.

Fundament will distribute ownership to investors via a token based on the Ethereum blockchain, thus marking the country’s first-ever real estate backed security token regulated by BaFin. The other approved STO was for a lending startup, Bitbond.

Fundament Group is a German firm that specialises in the tokenization of assets. It is based in Berlin, the group mainly invests in commercial real estate and has holdings in Berlin, Hamburg, Rostock, Jena and Fulda.

The Fundament Real Estate Token upon issuance will inject liquidity into traditionally illiquid real estate investments. Hence, investors can now quickly liquidate investments anytime, on designated secondary markets.

Notably, Fundament’s solution builds a tradable asset class backed by real estate projects since the token is set to be marketable worldwide and independently of banks.

Fundament Group co-founder Florian Glatz said the company was excited to be the first one to get approval from BaFin and was looking forward to start the sales process. He said:

“As the first company to receive approval from the German Financial Market Authority for a blockchain-based real estate bond, we are excited to enter the sales process for the Real Estate Security Token, while already preparing the tokenization of other highly attractive assets.”

Fundament Group brings together a team of experienced experts from different fields such as real estate developers, lawyers, financial and political advisors. The company hopes to offer a linkage between the traditional capital market and virtual blockchain-based financing.

The adoption of this technology will allow investors globally to access the German real estate market through the tokenized bonds. In addition, provisions will be made for investors to decide whether to make deposits and withdrawals in Euros, Dollar, Bitcoin, or Ether.

According to Glatz, IDknow will be used to verify the customer’s identity to ensure the company complies with know-your-customer (KYC) and anti-money-laundering (AML) requirements. Glatz explained that the process will consume at least three minutes on average before one is allowed to buy tokens.

Fundament is one of several firms attempting to tokenize real estate holdings. Although many in the crypto-sphere have argued that most assets are likely to be tokenized, the property is more likely than others to go through the process. This is because unlike various asset classes, real estate has traditionally been hard to trade. Breaking it up into tokens means that this can be done much more easily.

Tokenization is taking root in Europe and as CoinDesk reports, the Malta Financial Services Authority (MFSA) published prospective regulatory guidelines and policies to enable smooth security token offerings in the country.

Do you think the approval of Fundamental’s real estate bond will encourage other blockchain-based companies to come up with similar projects? Let us know in the comments section.

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Author: Joseph Kibe