A comprehensive research report published by the Financial Services Agency titled "Analysis for Sound Development of Stablecoins Research Report [Japanese]." Commissioned to Deloitte Touche Tohmatsu Consulting, it provides detailed analysis of stablecoin usage patterns, illicit use risks, and issuer business practices, offering insights for sound development.
Key Points
1. Report Overview
- Contractor: Deloitte Touche Tohmatsu Consulting LLC
- Publication Date: March 2025
- Client: Financial Services Agency
- Academic Advisors:
- Professor Naoyuki Iwashita, Kyoto University
- Research Professor Shin'ichiro Matsuo, Georgetown University
- Professor Tetsutaro Uehara, Ritsumeikan University
- Analysis Partners: Chainalysis, Elliptic, TRM Labs
2. Background and Purpose
Rapid Growth of Stablecoins
- Market Size: Market cap exceeding $10 billion (as of January 2025)
- Major Currency: Tether (USDT) ranks 3rd in market cap among all crypto assets
- Expanding Usage: Accelerating adoption by individuals, businesses, and institutional investors
- Strengths:
- Avoiding price volatility risks
- Fast remittances and settlements
- Low-cost operations
Key Concerns
- Expansion of Illicit Use:
- Exploitation of anonymity and immediacy
- Money laundering (AML)
- Counter-terrorist financing (CFT)
- Counter-proliferation financing (CPF)
- Financial Stability Risks:
- Warnings from FSB
- Systemic risk concerns
- Need for regulation
3. Report Structure and Key Research Items
Chapter 1: Payment-Related Use Cases and Peripheral Services
- Overview of Stablecoins:
- Characteristics of major stablecoins
- Technical foundation (blockchain)
- Issuance and distribution mechanisms
- Payment Use Cases:
- International remittances
- B2B payments
- Retail payments
- DeFi (Decentralized Finance)
- Factors Promoting Adoption:
- Development of Layer 2 technology
- Integration with payment networks
- User interface improvements
Chapter 2: Usage Status and Illicit Use Cases
- Definition and Classification of Illicit Use:
- Inflow stage (converting criminal proceeds to crypto assets)
- Laundering stage (mixing, layering)
- Cash-out stage (conversion to fiat currency)
- Major Methods:
- Exploitation of non-custodial wallets
- Use of decentralized exchanges (DEX)
- Utilization of cross-chain bridges
- Technical Characteristics and Trends:
- Privacy enhancement technologies
- Anonymity improvement tools
- Methods to make tracking difficult
Chapter 3: Business Reality of Issuers
- Major Issuer Analysis:
- Tether (USDT)
- Circle (USDC)
- Business models and revenue structures
- Asset Management Systems:
- Composition of reserve assets
- Audit and disclosure systems
- Risk management frameworks
- Technical Countermeasures:
- Smart contract design
- Asset freezing functions
- Compliance features
4. Reality of Illicit Use and Countermeasures
Actor Analysis
- Illicit Users:
- Organized crime groups
- Cybercriminals
- Terrorist organizations
- Intermediaries:
- Illicit exchanges
- Mixing services
- P2P trading platforms
- Victims:
- General investors
- Financial institutions
- Regulatory authorities
Direction of Countermeasures
- Technical Countermeasures:
- Advanced blockchain analysis
- AI/ML-based anomaly detection
- Real-time monitoring systems
- Regulatory Countermeasures:
- Strengthened KYC/AML
- Travel rule implementation
- International cooperation systems
- Industry Self-Regulation:
- Information sharing platforms
- Best practice development
- Certification system introduction
5. Issuer Risk Management
Reserve Asset Management
- Asset Composition:
- Cash and cash equivalents
- Short-term government bonds
- Commercial paper
- Ensuring Transparency:
- Regular audit reports
- Real-time disclosure
- Third-party verification
Compliance Systems
- Internal Controls:
- Risk assessment processes
- Internal audit functions
- Compliance departments
- External Cooperation:
- Dialogue with regulatory authorities
- Cooperation with law enforcement
- Industry association activities
6. Technology Trends and New Initiatives
Layer 2 Solutions
- Improved scalability
- Reduced transaction costs
- Enhanced processing speed
Cross-chain Technology
- Ensuring interoperability
- Improved liquidity
- Ecosystem expansion
Programmable Money
- Utilizing smart contracts
- Conditional settlements
- Automatic execution functions
7. International Regulatory Trends
- FSB (Financial Stability Board):
- Global regulatory framework
- Risk assessment criteria
- Supervisory guidelines
- FATF (Financial Action Task Force):
- AML/CFT standards
- Travel rule
- Risk-based approach
- National Regulations:
- EU: MiCA regulation
- US: Stablecoin legislation
- Japan: Revised Payment Services Act
8. Recommendations for Sound Development
Short-term Measures
- Strengthening illicit use countermeasures
- Transparency improvement measures
- Enhanced user protection
Medium to Long-term Measures
- Regulatory framework development
- Establishment of technical standards
- Building international cooperation systems
Innovation Promotion
- Sandbox systems
- Strengthened public-private partnerships
- R&D support
9. Implications for Stakeholders
Issuers
- Continuous improvement of compliance systems
- Strengthening technical security
- Dialogue with stakeholders
Users
- Improved risk awareness
- Understanding proper usage methods
- Implementation of security measures
Regulatory Authorities
- Risk-based regulatory approach
- Promotion of international cooperation
- Balance with innovation
10. Conclusion and Future Outlook
This report comprehensively analyzes the challenges and opportunities faced in the process of integrating stablecoins into the financial system. A trinity approach of technical countermeasures, regulatory development, and industry self-regulation is essential for balancing responses to illicit use risks with sound market development.
For stablecoins to truly become payment infrastructure that contributes to society, balanced development is required that enhances transparency, security, and efficiency while leaving room for innovation. The insights from this report are expected to contribute to stakeholder initiatives and international policy discussions.