back to article Japan lets its banks and other entities issue stablecoins

Japan's parliament has passed legislation allowing Yen-linked stablecoin cryptocurrencies, thus becoming one of the first countries – and by far the largest economy – to regulate a form of non-fiat digital money. The regulations stipulate that only banks and other registered financial institutions – like money transfer agents …

  1. Nik 2

    non-fiat digital currency?

    This stablecoin is an officially recognised form of currency without a relationship to any physical asset. Its face value is guaranteed because the government of Japan says it is.

    How is this not a fiat currency?

    If it is a fiat currency, what advantage does it offer over the existing currency, other than that it can be traded without the use of a clearing bank?

    1. GidaBrasti

      Re: non-fiat digital currency?

      It must has the word "crypto" somewhere in its brochure, that should be enough for all of you luddites

      1. sreynolds

        Re: non-fiat digital currency?

        As opposed to your crypto currencies that are guaranteed by some arbitrary consensus algorithm over which they have gained control over?

    2. Roland6 Silver badge

      Re: non-fiat digital currency?

      >what advantage does it offer over the existing currency

      Probably the main benefit is to permit innovation in practical everyday digital currency ie. not highly volatile currencies such as bitcoin or other blockchain-based forms of speculation.

      Remember if the government/national bank were to officially adopt a digital currency, they would have to get it right, in all the detail, the first time.

    3. Anonymous Coward
      Anonymous Coward

      Re: non-fiat digital currency?

      Stablecoins are supposed to be backed by a 1:1 reserve of the associated FIAT currency.

      I.e. for every $STABLECOIN there has to be $FIATCOIN in reserve to back it. That's where a lot of other stablecoins have fallen over and it is why Tether has always been scrutinised because they very rarely (if at all) release any thorough audits etc.

  2. Howard Sway Silver badge

    the decision relied heavily on trends in the US and Europe

    The key word here is "trends". Everybody else is doing it so we'll do it too. Any explanation of why financial regulators believe that what the world really needs right now is hundreds and hundreds of adittional currencies, and what real life problems only these currencies can solve is glaringly absent. Because there is no rational explanation.

    1. Yet Another Anonymous coward Silver badge

      Re: the decision relied heavily on trends in the US and Europe

      >and what real life problems only these currencies can solve is glaringly absent

      My XXX born colleague wants to send some money home to his parents. He can't because the banks won't deal with XXX because our government doesn't like the country's leader. So he has to give some $ to a guy at the local XXX food store, who knows somebody who is going there who will pass the money on - hopefully.

      Another friend wants to send money home to a friendly country where people don't have international bank accounts so he has to use a money transfer service that charges 20%.

      I want to pay a few cents when I read a post/view a youtube video to support the creator. But KYC rules means that it would cost $10s for them to process a payment from my country.

      I want an algorithm that pays someone when certain easily verifiable events happen online - but I don't want to pay an accountant and lawyer $1000s to handle this.

      There are lots of things that I might want to do with money that are quite legal but difficult with our banking system.

      1. emfiliane

        Re: the decision relied heavily on trends in the US and Europe

        Speaking of the 20% currency transfer fee or that microtransaction idea -- that's one of the biggest knocks against the whole cryptocoin system, the fees are astronomical for small transfers. When you move around thousands or millions of dollars in a single transaction, no biggie, but mining fees and currency cash-out fees are a gigantic tax on the use of any cryptocoin for its original stated purpose.

        So crypto doesn't actually cover many of your use cases either, which explains why it's treated as a speculative commodity instead.

  3. Pascal Monett Silver badge

    "only banks and other registered financial institutions"

    That should at least guarantee that the yahoos are not going to mess things up this time, but I fail to see the point of all this.

    Digital currency ? They're all digital already. I haven't used physical money for the last two years, if I pay, I just bonk the VISA on the machine and I'm done. If I need to transfer money or pay online, I just connect to my bank and I make the order - it's processed in less than five seconds (during banking hours, that is).

    I fail to see how a so-called stablecoin will bring anything better to the market.

    1. Al fazed

      Re: "only banks and other registered financial institutions"

      The hidden value is in the "real" investors money that they can consume in their R&D into digital exchange mechanisms.

      Yes it doesn't matter what the currency is when you stick your card into the ATM, I can use my Debit Card all around the world, (except Russia at the mo) and get the relevent cash or make a purchase.

      The only reason for this malarchy is the extra grime they can sqeeze into their coffers for just thinking about crypto or digital anything.

      The fact that they haven't got a clue, should be glaringly obvious to anyone capable of reading the Register and comprehending the actual exponential number of way things will go wrong - 'cos no one at the top knows what the fuck is going on ........... Wahey


    2. elsergiovolador Silver badge

      Re: "only banks and other registered financial institutions"

      They're all digital already. I haven't used physical money for the last two years, if I pay, I just bonk the VISA on the machine and I'm done.

      But you can still get your "digital" money in cash if you wish to do so and then you can use it without supervision of a third party. When actual digital money comes in (coined as CBDC), you won't be able to exchange it for cash. Then imagine one of your friends commits a thought crime and Mooselini decides to deprive them of their money. Normally you could get some cash to help them out weather the storm, but it won't be possible with CBDC. You'll get flagged and blocked too or your social credit score will take a hit and you'll get banned from using public transport or charging your car.

      Every government run by WEF is working on CBDC.

  4. ThatOne Silver badge

    Non-fiat fiat money?

    > a form of non-fiat digital money

    Sorry? I might have my definitions wrong, but how is that non-fiat digital money? Sounds to me like the very definition of "fiat money": A type of currency that is not backed by gold or silver (that would be "representative money") but simply issued by some institution (government, bank) who entirely backs it.

    Our quaint old currencies were originally backed up by gold, everybody could go and exchange his dollars for gold. That worked until governments needed to devalue their currency to pay for warfare, so our initially "representative" currencies became "fiat", ie. not worth anything except a promise each government will consider its currency as having some value.

    Now the only difference I see with cryptocurrency, is that said cryptocurrency is not even backed up by some nation's government (which always has some financial credibility) but only by some shady fly-by-night company and the greed of people hoping to make a quick buck. It simply lacks the guarantee (as weak as it might be nowadays) that backs up existing currencies, and thus is only a vessel for speculation (and money laundering).

    I know I'm going to be downvoted by all the hip kids who have to follow all the current fads lest they lose their street cred, but if you look at it with a cool head, the only advantage cryptocurrencies might have is to not be controlled by any government out there, which might be vital to some, but isn't really important for most. In this perspective government-controlled cryptocurrencies definitely have no advantage or even reason to be, being at the same time government-controlled and volatile... Take the worst of two worlds and market it as progress...

  5. Chessel

    THHGTTG: Currancy: None.

    ...the Flanian Pobble Bead is only exchangeable for other Flanian Pobble Beads...


  6. Anonymous Coward
    Anonymous Coward

    Twenty six years ago, in the year 1995, the Dutch had the ChipKnip card system.

    Money could be transferred from one physical smartcard to another in an offline manner, such as paying a parking meter that did not call home for every transaction.

    Chipknip was shut down in 2014.

    1. ThatOne Silver badge

      Most likely because it didn't call home. Why renounce making an additional profit reselling juicy customer data? How much he spends, on what kind of product, when and where, how often, all things marketers would pay good money for.

  7. Anonymous Coward
    Anonymous Coward

    Every nation on Earth working in lock step to introduce CBDCs

    It's easy to see why when you realise the power and control afforded to the elites once every single financial transaction can be monitored and regulated.

    China's social credit system has provided the blueprint and everyone else is slowly heading towards the same destination.

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