The Parliament of Japan reportedly passed legislation that will put stablecoins under enhanced scrutiny. The initiative aims to give local investors further protection when dealing with such assets.
Japan Sees Stablecoins as Digital Money
According to a recent Bloomberg report, the Japanese authorities issued new guidelines on stablecoins. The lawmakers granted the assets a legal status, recognizing them as digital money. However, stablecoins must be pegged to the country’s national currency (the yen) or another legal tender to be categorized as such.
The newly-passed bill means that only authorized banks, trust companies, and money transfer agents can issue that type of token. The directive does not apply to the largest stablecoins by market capitalization – Tether (USDT) and USD Coin (USDC) – but only to stablecoins issued by Japanese enterprises. Currently, no local exchanges issue such products.
Japan’s Financial Services Agency explained the legislation will become effective in a year. At the same time, stablecoin issuers will be put under the authorities’ scope in the following months.
The necessity for new rules in the space could be prompted by the recent collapse of Terra’s algorithmic stablecoin – UST. Last month, the token lost its peg and is currently trading at a mere $0.02. The crash caused significant panic in the crypto sector, while numerous investors parted with colossal sums.
Mitsubishi UFJ Trust to Issue a Stablecoin
Earlier this year, the Tokyo-based financial services company said it plans to create a stablecoin tied to the value of the Japanese yen. The asset could enable Mitsubishi UFJ Trust to improve its payment processes by settling securities transactions.
The endeavor could also propel the usage of blockchain technology in securities trading. The Japanese Trust Bank has promoted its employment in a partnership with Daiwa Securities and SBI.
Mitsubishi UFJ Trust is the banking arm of Mitsubishi UFJ Financial Group. The latter is Japan’s largest monetary organization and one of the world’s leading bank holding companies, managing assets of over $3 trillion.