The TerraUSD (UST) debacle is forcing major economies around the world to prepare legislation. Important news came from Japan. Japan is poised to become the first country to pass a law on cryptocurrencies and stablecoins.
Japan recognizes stablecoins as cryptocurrencies
On Friday, the Japanese parliament passed a stablecoin law recognizing stablecoins as cryptocurrencies. Also, only stablecoins backed by yen or other legal cash will be legally recognized. However, asset-based stablecoins and algorithmic stablecoins like Tether (USDT) are not included in the regulation. This mechanism was used on Terra UST and LUNA.
Stablecoin law in preparation amid increasing adoption
Japan, individuals and businesses Take individuals and businesses Increasingly Adopting Cryptocurrencies It is one of the most crypto-friendly countries with investors. According to Bloomberg, on June 3, the Japanese parliament passed a stablecoin law that clarifies the legal status of stablecoins in the country while recognizing them as cryptocurrencies.
Under the new law, only licensed banks, registered money transfer agents, and trust companies will be allowed to issue stablecoins. Asset-backed stablecoins and algorithmic stablecoins from abroad, such as Tether, are not included in the calculation. Stablecoins are not listed on Japan-based crypto exchanges.
New Law Comes into Effect Next Year
In addition, Japan’s Financial Services Authority has announced that the law will soon require stablecoin issuers to issue stablecoins only from authorized banks to approve companies and enact regulations. When the legislation goes into effect next year, Mitsubishi UFJ Trust and Banking Corp. launch a stablecoin, Progmat Coin. Progmat Coin is fully backed by the yen in escrow. It also offers depreciation at par.
As the use of crypto increases in Japan, the country is looking to protect investors in the unpredictable crypto market. Kriptokoin.com As we reported in the news, the collapse of UST and LUNA triggered a massive sell-off in the cryptocurrency market. Tether, the largest stablecoin, briefly lost its dollar peg as a result of the meltdown. It has caused billions of dollars in losses to investors around the world and encouraged governments to enact stablecoin rules.
Begins crypto and stablecoin preparations in other countries
After the Terra ecosystem collapsed in early May, governments around the world are working on bills governing stablecoins to protect investors. The US and UK are actively working on a stablecoin law. Treasury Secretary Janet Yellen recently presented a regulatory framework for stablecoins to Congress. Meanwhile, the UK Treasury plans to pass stablecoin legislation to protect investors.