The bill does not address existing asset-backed stablecoins.
Mitsubishi UFJ intends to launch its own stablecoin called Progmat Coin.
On Friday Japan’s government implemented a legal framework for stablecoins that offering a safeguard for investors, following last month’s TerraUSD crackdown which led to multibillion-dollar losses.
The collapse of algo-stablecoin TerraUSD made all the country rethink the legalization of cryptocurrency which lost all its value and made investors lose millions. Japan is one of the first large economic countries to enact a specific law on stablecoins.
What the Bill Says
The bill tightens the concept of stablecoins which will henceforth be recognized as virtual money. It must be tied to the yen or other legal tender and ensure that holders can redeem them for their current prices.
Furthermore, the Legislation says that stablecoins will only be issued only by licensed banks, registered money transfer platforms, and trusted firms. Existing asset-backed stablecoins like Tether, as well as its computational counterparts algorithmic stablecoins, are not covered under the Act.
The bill was prepared by Japan’s Financial Services Agency (FSA) and was scheduled to be passed by the House of Councilors in late 2021. It was accepted by the Parliament in this year mid-March and now has been passed.
A stablecoin is a cryptocurrency whose value is connected to an actual asset, such as the US dollar or gold, in order to maintain price stability. Currently, stablecoins have a combined market value of around $160 billion.
Today the FTX Trading Ltd a cryptocurrency exchange announced the launch of FTX Japan, which will offer service for Japanese consumers.