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Countries across the world seek to keep their citizens safe in terms of investment in crypto assets by putting regulations
The Parliament of Japan, while making a historic move, passed a legal framework regarding stablecoins on Friday. This came after given the goal of the Japanese government to provide a safeguard to its investors keeping Terra netowrk’s stablecoin UST collapse in consideration that happened last month. Notably the collapse of Terra network has resulted in the loss of multibillion dollars as reported.
Japan is among the countries who is one of the first to pass a stablecoin law specifically, even if it implies legislation this year itself Japan would be still the first one to do so. The bill that Japan has presented has the clarity around the stabelcoin’s definition that will be considered as a full fledged digital money and it must have to set up a link with Japanese currency Yen or such similar legal tender. This would guarantee the holders about their right to reclaim their asset at face value.
Now the stablecoins can only be issued by registered money transfer agents, licensed banks and trusted companies. However the bill does not have any mention of existing algorithmic or asset backed stablecoins, it’s also a fact that exchanges in Japan have not listed any stablecoins.
The Financial Services Agency of Japan has prepared the bill that was planned in the later part of 2021. The bill was already accepted in mid March of this year by the House and it has now passed in the House of Councilor plenary session with majority.
Following the collapse of Terra network’s stablecoin UST collapse, the rapid action by Japanese authorities could result in helping restore investors’ confidence in crypto. Nonetheless, a stablecoin is just another type of cryptocurrency that has its value tied to another asset which most of the time remains stable against the crypto asset such as the fiat currencies like US dollar or gold to bring them price stability.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
