Japan parliament passed a legal framework for clarifying the legal status of stablecoins
On Friday upper
house of Japan's parliament has passed a legal framework that clarifies the
legal status of stablecoins which specifies them as digital money.
This new legislation will come into effect in 2023. As a result of the bill, stablecoins would be defined as digital money that is linked to a legal tender, ensuring the right of holders to redeem them at face value. Only licensed banks registered money, transfer agents and trust companies can only issue Stablecoins with the FSA reporting that regulations governing stablecoin issuers are to be introduced in the coming months. Existing asset-backed or algorithmic stablecoins are not being existed by the bill. Coin holders must be guaranteed that they would be able to redeem stablecoins at face value by linking them to the yen or another legal tender as in Japan, stablecoins do not get listed in exchanges.
The bill was initially prepared by Japan's Financial Services Agency (FSA). The bill was planned for late 2021 and in December 2021 it was first announced. Before being approved by a majority, during the House of Councilor’s plenary session, it was accepted by the House and passed Parliament in March. Now it has been passed by a majority in the House of Councilors plenary session. The report said Japan is among the first major economies to pass a stablecoin law, even if it takes effect in one year. As per the report, this bill will provide a safety net for investors in the wake of last month's terraUSD collapse that resulted in multibillion-dollar losses.
Mitsubishi UFJ Trust and Banking Corp frame out plans to issue Progmat Coin which is its own stablecoin. Yen reserves from the trust account will fully support the Tokyo-based bank's stablecoin. In contrast, the new law does not apply to existing asset-backed stablecoins issued by overseas companies, such as Tether, or their algorithmic counterparts.
U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce and U.S. Treasury Secretary Janet Yellen, join a debate where the need for clear regulatory rules about the use of cryptocurrencies and stablecoins was highlighted. At the beginning of this week, the Bank of England wanted to have the ability to intervene to oversee stablecoin.
Stablecoins are cryptocurrencies whose value is tied to an external asset, such as the dollar or gold, to stabilize their price
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