On Friday, Japan passed a bill that defines stablecoins as digital money, Bloomberg reports.
The new law, which is expected to take effect in a year, follows last month's Terra-Luna crash which shook the cryptocurrency world.
In August last year, the Japanese financial markets regulator initiated discussions and debates on new crypto laws to bring new regulations around risky digital assets this year.
With the new law, Japan has become one of the major economies to introduce a legal framework around stablecoins, the outlet said.
A stablecoin is a type of cryptocurrency whose value is fixed to another asset, such as the US dollar or Euro.
In addition, the new law demands that stablecoins must be linked to the Japanese yen or another legal currency.
Moreover, such stablecoins must have been designed to guarantee holders the right to redeem them at face value.
Also, the new regulation means that only licensed banks, registered money transfer agents and trust companies can issue stablecoins, the outlet reported.
Japan and Crypto Regulation
Sometime this month, Bitcoin Satoshi’s Vision (BSV) is expected to become the 15th cryptocurrency listed on Huobi Japan, which is one of the most popular cryptocurrency exchanges in the country.
This number, when compared to the number of cryptocurrencies listed on exchanges in other countries, reflects the strict regulatory environment cryptocurrency stakeholders operate in Japan.
In 2021, Japan’s Financial Services Agency (FSA) established a new unit to oversee digital currency regulatory frameworks.
Citing three anonymous officials, Reuters had reported at the time that the move followed the country’s concern over the influence of private money on the existing financial system.
Although, Japan has always been a progressive country when it comes to crypto adoption and regulation.
Some of the earliest cryptocurrency exchanges were established in the East Asian country and have led the market in Bitcoin trading for many years.
However, crypto regulations in the country underwent a major overhaul in 2019 after a massive attack on the country’s leading crypto exchange, Coincheck, which resulted in the theft of more than $500 million worth of digital currencies.
