Japan Passes Stablecoin Bill For Investor Protection

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Japan became one of the first of the developed nations to introduce legal regulations around stablecoins by way of a legislative bill in the parliament. The development comes in the wake of the recent Terra-UST collapse that caused millions of dollars to be wiped off from the crypto ecosystem. 

On Friday, Japan’s parliament passed a bill clarifying the legal status of stablecoins in the country, defining them as digital money. The new law, which will come into effect in a year, makes it necessary to link stablecoins to yen or any other legal tender. Stablecoins must also give the holders the right to redeem the coins at their face value.

Legally, this means that stablecoins can be issued only by trust companies, licensed banks, and registered money transfer agents. Stablecoins are not listed on any of Japan’s cryptocurrency exchanges. The legislation does not address asset-backed stablecoins like Tether or their algorithmic counterparts issued by international issuers.

Japan’s Financial Services Agency (FSA) states that they will introduce stablecoin issuers regulations in a few months. The new framework is set to take effect in a year.

Once the legal framework takes effect, Mitsubishi UFJ and Banking Corp. have plans to issue their stablecoin, which will go by the name Progmat Coin. The token will be fully backed by yen placed in a trust account and will guarantee the redemption at face value, Mitsubishi UFJ Financial Group Inc.’s bank stated.