Japan Passes Stablecoin Law for Investor Protection

The government of Japan has adopted a proactive approach to cryptocurrencies. After the catastrophic fall of the UST token, financial regulators around the world entered into a state of emergency on the matter of stablecoin legislation. However, there is a considerable amount of pressure from the crypto community, citing issues related to centralized control.

To address the matter, the parliament of Japan has passed a new bill to grant legal status to the stablecoins in the region. Under the legislative guidance of the bill, the stablecoin issuers are required to ensure a warranty for their investors to be able to redeem tokens at face value. Many opine that the Japanese regulators have cracked the code for perfect legal scrutiny for stablecoin projects.

Landmark Stablecoin Bill

According to the new bill passed at the parliamentary house on the weekend, the stablecoins in the region are recognized as a formal legal entity. The regulators in Japan have also decided to grant the status of digital money to the stablecoin projects available in the country. On the other hand, cryptocurrency investors are taking note of the stablecoin bill claiming that it considers the investor’s protection.

The organizations and developers who wish to introduce stablecoins in the region or are already running such products must peg their tokens to yen or any other viable legal tender. The most important aspect of the regulatory clarity is that the investors of the stablecoins can redeem their token purchases at any given time at face value. Furthermore, the banks with certification can also issue a stablecoin in addition to remittance services providers, trusts, and digital payments solutions.

The appointed regulator for stablecoin oversight is the Financial Services Authority of Japan. For the next few months, the FSA is planning to ensure that the regulation around stablecoins is improved and updated accordingly. It is worth noting that stablecoin projects that are issued by foreign entities like USDC are not yet recognized as legal entities in Japan.

On the other hand, the Mitsubishi Trust and Several Banking entities in the country are already making plans to issue new stablecoins. In countries like UK and USA, the financial regulators are also working on introducing a more secure and comprehensive regulatory infrastructure for stablecoins. However, cryptocurrency investors have expressed their concerns about the increasing influence of centralized government on the sector.

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