Japan passes Stablecoin Bill! Must be pegged to fiat currency, ensure redeemability, and can only be issued by specific financial institutions.

After the collapse following the decoupling of the stablecoin UST from the Terra ecosystem, governments around the world are accelerating the establishment of related legislation. Last Friday, the Japanese parliament formally passed a bill that clarifies the legal status of stablecoins within its borders.

Japan Passes Stablecoin Bill

According to Bloomberg, Japan has officially passed a milestone stablecoin bill. The bill was initially drafted by the Japanese Financial Services Agency (FSA), announced in December 2021, passed in March at the parliament, and received majority approval at a plenary session of the Lower House on Friday.

The bill clarifies the legal status of stablecoins, defining them essentially as digital currencies pegged to the Japanese yen or other legal tenders, ensuring holders the right to redeem at face value.

Furthermore, the bill stipulates that stablecoins can only be issued by licensed banks, registered money transfer agents, and trust companies. This means that overseas issuers like Tether or decentralized algorithmic stablecoins are not recognized and cannot be listed on cryptocurrency exchanges in Japan.

The bill is expected to take effect within a year, and the FSA will introduce regulations for managing stablecoin issuers in the coming months.

Mitsubishi UFJ Trust and Banking Corporation also announced plans to issue their stablecoin, Progmat Coin, once regulations are finalized. This stablecoin will be backed by Japanese yen held in a trust account, ensuring redemption at market value.

Some Japanese Exchanges No Longer Offer Stablecoins

According to Coingecko data, among the major exchanges in Japan, apart from Liquid, exchanges such as Bitbank, Zaif, Coincheck, no longer offer stablecoin assets for purchase.