Japan is at the forefront of recognizing stablecoins

The ‘land of the rising sun’ has stepped forward to introduce a legal framework for stablecoins on Friday. The new bill would classify stablecoins as digital money.

Japan’s parliament confirmed that stablecoins could only be released by registered banks, trust companies, or money transfer agents.

Unlike algorithmic stablecoins like UST that slumped recently, the bill noted that stablecoins must be linked to the national currency yen or any legal tender.

Additionally, the new law stated that the stablecoin must guarantee holders the right to redeem their cryptos at face value

However, the bill does not address asset-backed stablecoins in use, such as tether or algorithmic stablecoins

Japan has been cautious when it comes to cryptos or stablecoins. For instance, in December 2021, the country proposed new restrictions

that only allow banks and wire transfer services to issue stablecoins.

The de facto watchdog, Japan’s Financial Services Agency, intended to tighten other rules like overseeing wallet providers that engage in stablecoin transactions.