Japan announced on June 3 the adoption of a bill aimed at regulating the status of stablecoins on its territory. The archipelago is becoming one of the first countries to regulate these digital assets. As the cryptocurrency market continues to be highly volatile after the TerraUSD crash, many governments are tempted to regulate the industry.
Stablecoins regulated in Japan
The bill suggested by the Japanese Financial Services Agency (FSA), which has been under discussion since March 2021, has been approved. Japan’s House of Councilors has recognized stablecoins, these digital tokens backed by fiat currency, as digital assets. The law is expected to come into force in 2023.
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From now on, only licensed banks and registered financial institutions will be able to issue stablecoins in Japan. The law indicates that these assets must be linked to the yen or another legal tender currency, unlike algorithmic stablecoins. It also guarantees the right to exchange them for their face value at any time. These guidelines also apply to foreign operations that target Japanese users.
However, this new regulation does not mention either the foreign stablecoins already present in the territory such as Tether, nor the algorithmic stablecoins which are based on a sister cryptocurrency. Exchanges involving these kinds of digital tokens are still not listed on Japan’s crypto exchanges.
Regulators around the world are wondering
These measures submitted by the FSA come a month after the collapse of the stablecoins TerraUSD. Regulators around the world have been concerned about the impact of these digital currencies on the financial market. They demonstrated the importance of a framework for these assets based on the 300 billion dollars in cryptocurrencies lost following the Terra crash.
In the United States, Treasury Secretary Janet Yellen spoke to Congress about the need to regulate the sector, ” [Les stablecoins] present the same type of risks that we have known for centuries in bank runs “.
In Europe, it is directives responding to the name of Mica, for Market in crypto assets, which are being discussed. They aim to regulate stablecoins around 4 points: the creation of legal certainty thanks to a legal framework, the support of innovation, the protection of consumers and the guarantee of financial stability.
Some Japanese financial players intend to take advantage of this new framework. Mitsubichi bank UFJ Financial Group plans to release its own yen-backed stablecoin, the Progmat Coin, once the law is in place.