Japan Adopts Legislation Establishing Legal Framework for Stablecoins – The Japanese parliament has approved a draft law to regulate stablecoins and protect investors in the country. After the recent collapse of the algorithmic stablecoin terrausd, the new legislation is one of the first to be submitted.
A bill in Japan has been passed which will establish the legal status of stablecoins. Following the vote on Friday, Bloomberg reported that the legislation authors effectively categorized cryptocurrencies as digital money.
Following the collapse of the terrausd (UST) stablecoin and its sibling cryptocurrency terra (LUNA), Japan has become one of the first major economies to adopt such a framework. The incident resulted in a significant market drop and a loss of faith in stablecoins.
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Stablecoins should be pegged to the Japanese yen or another legal tender, and holders must be able to redeem them at face value, according to legislative rules. In Japan, they can only be issued by licensed banks, authorized money transfer agents, and trust corporations.
A stablecoin that Mitsubishi UFJ Trust and Banking Corp. intends to circulate is an example. Mitsubishi UFJ Financial Group Inc.’s banking unit revealed that its Progmat Coin would be completely backed by the yen and redeemable.
Existing asset-backed stablecoins from overseas issuers, such as tether (USDT), and algorithmic stablecoins are not covered by Japan’s new regulations. According to the report, such cryptocurrencies are not currently listed on Japan’s digital asset exchanges.
Binance usd (BUSD) are the most popular stablecoins, with a total worth of over $160 million. Despite the fact that they are presumably safe for holders, regulators all over the world have been attempting to develop regulations for this sort of crypto asset because of its importance to the entire crypto market, as highlighted by the terrausd implosion. Another important factor to consider is investor protection.
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Japan Adopts Legislation Establishing Legal Framework for Stablecoins – In a year, the new legal framework agreed by the Japanese parliament will go into effect. Meanwhile, in the coming months, the country’s Financial Services Agency (FSA) plans to develop legislation governing the activities of stablecoin issuers.
