The sound waves caused by the crash of Terra’s algorithmic stablecoin, UST, reached every part of the world. This further caused regulators to shift their focus from the volatile crypto market to stablecoins. An array of governments have been coming up with regulations surrounding these assets, however, none of them seemed to put these laws into effect just yet. Japan just joined the bandwagon and took a step ahead.
Earlier today, the Japanese parliament gave a green signal to a bill that recognizes stablecoins as digital money. This drew attention to Japan because it was one of the first big economies to implement a legal framework for stablecoins.
Stablecoins in Japan are now considered legal digital money. However, they are mandated to be backed by Japan’s fiat yen or another legal tender that allows holders to employ them at face value, Bloomberg reported.
Does this mean, the largest stablecoin Tether [USDT] would garner immense adoption in Japan? Not really. The latest bill does not acknowledge overseas stablecoins backed by assets like Tether.
In addition to this, only licensed banks authorized money transfer agents, and reputable companies were permitted to issue stablecoin. Ironically, crypto businesses in the country do not entail stablecoins. A few more regulations are expected to be introduced in the next couple of months. The Financial Services Agency of Japan would reportedly oversee this.
This legal framework about stablecoins has only been passed and is expected to go into effect in a year.
Regulators remain wary of the not so stable, stablecoin market
Terra’s crash changed the entire crypto market. While some are scared of rolling out their stablecoin, they know for sure that algorithmic stablecoins aren’t the way forward. Mitsubishi UFJ Trust and Banking Corp., however, remained untethered by this crash prepping for the release of Progmat Coin. The bank will reportedly roll out its very own stablecoin following the framework.
South Korea has been taking immense interest in Terra and its downfall. The UK followed suit by working on introducing regulations surrounding stablecoins.