Stablecoins that are tied to the value of the Japanese yen or another fiat currency are now subject to a new law in Japan. There has never been anything like this before.
Stablecoins are explicitly defined as digital currency under the legislation. People must be able to redeem them for their face value if they are connected to a legal currency, such as the yen.
After the TerraUSD crisis last month, governments throughout the globe are scrambling to safeguard stablecoin investors. Multi-billion-dollar losses were also reported, according to the study. Tokens with a total market value of $161 billion, according to CoinGecko’s research, are widely available.
The legal foundation for stablecoins will be implemented within a year. There will also be new restrictions for stablecoin issuers proposed by the Financial Services Agency of Japan in the coming months.
By the end of 2021, the Financial Services Agency of Japan has drafted a proposal. Since then, the House has taken action. The majority of the House of Councilors has now voted in favour of approving the resolution.
According to the source, Mitsubishi UFJ Trust and Banking Corporation plan to release its own stablecoin, dubbed Progmat Coin, after the legal framework is put in place by the government. As stated by the bank subsidiary:
As long as the trust account is full of yen, the token will be able to be redeemed at face value. MUFG’s ST Research Consortium, which was established in 2019 to work on security token standards, has contributed to the development of the Progmat Coin project. It has also been updated to include stablecoins, non-fungible tokens, crypto assets, and other sectors under the Digital Asset Co-creation Consortium.
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