Japan passes bill to limit stablecoin issuance to banks and trust companies

189
SHARES
1.5k
VIEWS


Japan is moving forward with legislation regarding issuance of stablecoins i.e. digital assets whose value is tied to fiat currencies or stabilized by an algorithm.

On June 3, Japan’s parliament passed a bill to ban the issuance of stablecoins by non-banking institutions, local news agency Nikkei reported.

READ ALSO

The bill reportedly states that the issuance of stablecoins is limited to licensed banks, registered money transfer agents, and trust companies in Japan.

The new law also introduces a registration system for financial institutions to issue such digital assets and provides measures against money laundering.

According to the report, the bill aims to protect investors and the financial system from the risks associated with the rapid adoption of stablecoins, which has increased its market share to 20 trillion yen, or more than $150 billion.

The new legal framework will reportedly take effect in 2023, with Japan’s Financial Services Agency planning to introduce rules for stablecoin issuers in the coming months.

related:UK government proposes additional safeguards against stablecoin failure risks

Japan’s stablecoin bill comes after a massive drop in cryptocurrency markets prompted by the collapse of the Terra token, in which the algorithmic stablecoin Terra UST (UST) lost its 1:1 value to the US dollar in early May.

Stablecoin market turmoil is not exclusive to the Terra blockchain, although other algorithmic stablecoins such as DEI subsequently lost their dollar peg, falling as low as $0.4 at the end of May.