Japan's parliament has passed a bill that will recognize stablecoins as digital currencies in the country, under certain conditions.
Japan, considered the world's third largest economy after the United States and China, has become the first major power to create a regulatory framework for stablecoins, in order to clarify the legal status of these digital assets within its territory.
Under the new framework law, approved by the country's parliament this week, stablecoins will be recognized as digital money.
However, this will apply under certain conditions. The first of these is that, in order to be considered digital currencies, Stablecoins must be backed by reserves of money denominated in Japanese yen or other legal tender fiat currencies.
The Asian nation also noted that Only regulated financial institutions, such as banks and licensed money dealers, will be able to issue stablecoinsThis is to ensure the security of investors participating in the growing cryptocurrency industry.
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The new policies being implemented by Japanese regulators follow a series of actions imposed by global regulators on stablecoins following the collapse of the USTC stablecoin on the Terra Classic blockchain.
The unlinking of USTC and the subsequent loss of value of LUNC, its sister cryptocurrency, wiped out more than $40.000 billion from crypto market investors, setting off alarm bells for authorities and financial regulators around the world.
Legal status for stablecoins in Japan
Japan's new regulatory framework for stablecoins will be implemented from next year and will allow these currencies to be recognized as a purely digital form of money.
Through this regulation, Japan will guarantee its investors and stablecoin holders the right to exchange their stablecoins for their nominal value.
Mitsubishi UFJ Trust and Banking Corp to issue its own stablecoin
Mitsubishi UFJ Trust and Banking Corp, one of the world's largest banks by assets under management, has said it will issue its own stablecoin under regulations the country will implement next year.
The stablecoin from Mitsubishi UFJ Financial Group's banking division, called Progmat Coin, will be pegged to the yen and backed by fiat reserves to ensure its value and stability.
In February this year, the Japan Virtual Currency and Asset Exchange Association (JVCEA), Japan’s regulator for exchanges and digital assets, had announced that it would ease regulation of the crypto industry to allow the listing of new crypto assets and tokens.
For its part, Japan’s Financial Services Agency was working on a crypto bill even before the Terra Classic cryptocurrency debacle and the broader market.
Another major nation on the path to regulating stablecoins is the United States, while the United Kingdom is creating additional safeguards to protect its investors from the potential risks that exist when trading with this type of cryptoasset, whose capitalization exceeds 152.700 million dollars today, according to data from CoinMarketCap.
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