The document is due to take effect in 2023. The authors of the law essentially designated stabelcoins as digital money.
Only licensed banks can issue stablcoins. Trust companies and registered payment system operators will also have this permission. At the same time, the new law also defines strict controls to protect buyers. In particular, buyers must be able to exchange their stabelcoins back into Japanese yen at any time. The law also requires issuers to disclose information about the security of coins and take measures to protect against market manipulation. An example is the stabelcoin that Mitsubishi UFJ Trust and Banking Corp. plans to distribute. The banking arm of this company said that its Progmat coin will be fully backed by the yen and subject to redemption.
The bill would not affect digital currencies issued by foreign issuers.
The decision to accelerate the legalization of stabelcoins Japanese authorities took after the third most capitalized stabelcoin UST depreciated in May. The cryptocurrency lost its peg to the U.S. dollar after a one-time sale of about $300 million and also triggered a drop in bitcoin. As a result, investors began withdrawing capital from the asset en masse.
The Luna Foundation Guard reserve fund sold billions of dollars worth of bitcoins and other cryptocurrencies to restore the token. Also, the LUNA token issue, which provided stability to UST, was raised to $6.9 trillion.
The implementation of the regulatory framework will help build confidence in new digital assets and promote their use in the economy, as well as maintain stability and protect companies and citizens who have invested in fiat-backed digital currencies, according to proponents of the law. Passage of the law is a positive step for the development of stable coins in Japan.
CEO and Founder of Cryptoconsulting,
Expert in web3 technologies – Kotov Dmitry
