One of the major economies, Japan introduced a legal framework to regulate stablecoins. The move comes soon after last month’s collapse of the TerraUSD token which put cryptocurrencies into the global spotlight once again for the wrong reasons.
The parliament of Japan passed a bill on Friday which clarified the legal status of stablecoins. The bill defines stablecoins as digital money. It says clearly that stablecoins must be linked to the Yen or another legal tender. The new law also says that holders of such coins will also have the right to redeem them at face value.
Such coins can be used by everyone but can only be issued by registered money transfer agents, trust companies and licensed banks. However, the bill does not address existing algorithmic or asset-backed stablecoins. Anyway, exchanges in Japan do not issue stablecoins.
The bill was planned back in 2021 by Japan’s top banking regulator which seeked to limit the issuance of stablecoins to banks. It was accepted by the house this year in March and has been finally passed in the plenary session of the House of Councilors by a majority.