Japan Passes Stablecoin Bill to Protect Crypto Investors

In a landmark event, on Friday, June 3rd, Japan’s parliament passed a law clarifying the legal status of stablecoins. The bill comes a month after the collapse of Terra’s UST stablecoin which led to multi-billion dollar losses.

Japan Legalizes Stablecoins

Japan becomes the first major economy to pass a legal framework around stablecoins.

The bill provides clarity around the definition of stablecoins, which rules that stablecoins are digital money. 

According to the bill, stablecoins classified as digital money may now be issued only by licensed banks, registered money transfer agents, and trust companies.

Japan Places Emphasis on the Security of Crypto Investors

The ruling in Japan comes as part of a five-year effort to protect consumers investing in cryptocurrencies. As per the bill, holders of stablecoins now have the right to redeem them at face value.

Japan’s Financial Services Agency will devise regulations for stablecoin issuers in the coming months. However, the settled upon legal framework for stablecoins will only come into effect next year.

Ahead of the bill’s approval, Mitsubishi UFJ Trust and Banking Corp outlined plans to issue their own stablecoin, called Progmat Coin.

On the Flipside

  • The bill does not address algorithmic stablecoins like TerraUSD, or exchanges in Japan that do not list stablecoins.

Why You Should Care

The historic move from Japan could potentially spur other countries into outlining legal frameworks for stablecoins.

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed to be financial legal or tax advice. Trading Forex, cryptocurrencies, and CFDs poses a considerable risk of loss

Author

Milko is a DailyCoin reporter, mainly focused on Ethereum (ETH), Cardano (ADA), and their founders (Vitalik Buterin and Charles Hoskinson). Milko is an avid follower of crypto and blockchain technology and has written thousands of articles on the subjects. He finds joy in transforming complex issues into written content that anyone can understand. Milko has used and analyzed numerous exchanges, such as Coinbase, FTX, and Binance. He also closely follows all of the latest news around the largest decentralized exchanges (DEXs).