Japans Parliament Passed New legal Framework Governing Stablecoins
This past Friday, Japans Parliament passed a new legal framework governing stablecoins in a historic move, thereby providing a safety net of sorts for investors in the aftermath of last months TerraUSD collapse, which resulted in innumerable losses across the entire crypto market and community.
Although the new law will be administered in a years time, Japan is nevertheless among the first major economies to pass a stablecoin-specific law. After the aforementioned Terra disaster, many became increasingly concerned about the future of stablecoins and the wider crypto industry in general.
As such, the bill clarifies the definition of stablecoins, which are now considered as virtual money and are therefore mandated to be linked to the Yen or any another legal tender, therefore allowing holders to redeem them at face value.
Moreover, only licensed banks, registered money transfer agents, and trust companies can issue stablecoins from now on. The bill makes no mention of asset-backed or algorithmic stablecoins, as stablecoins are infact not listed on Japanese exchanges.
The bill was designed by Japans FSA (Financial Services Agency) in late 2021 and was accepted by the House of Councilors a few months ago in March, 2022. Most recently, the House passed the bill after a majority vote during the plenary session.
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