The Japanese Parliament has passed a bill that establishes a legislative framework for stablecoins, thereby classifying them as digital money.
- Stablecoin is designed so that the value is linked with the legal tender, which makes it easier to stabilize compared to other type of cryptocurrencies such as Bitcoin that are not backed by the legal tender. Stablecoins are rapidly gaining momentum and countries are more concerned about stablecoins as they see them as a strong alternative to legal tenders.
- Amendments such as the Funds Settlement Law, which stipulates restrictions on businesses handling the digital currency “Stablecoin” that stabilizes its value in conjunction with legal tender, were passed at the House of Councilors plenary session on the 3rd.
- The registration system is for an intermediary that stands between the issuing bank or trust bank and the user. The new law is aimed at clarifying the legal status of stablecoin and protect users under the supervision of the Financial Services Agency.
- Investor protection has become a major concern following the collapse of the terrausd (UST) stablecoin, and its sibling cryptocurrency terra (LUNA). Japan has become one of the first large economies to bring a legal framework for stablecoins.
- The stablecoin bill was initially unveiled in December 2021 and passed Parliament in March before being approved by a majority of House of Councilors members during today’s plenary session.
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