Japan is continuing to move forward with legislation concerning the issuance of stablecoins i.e. digital assets using their value pegged to fiat currencies or stabilized by an formula.
On June 3, Japan’s parliament passed an invoice to ban stablecoin issuance by non-financial institutions, local news agency Nikkei reported.
The balance apparently stipulates the issuance of stablecoins is restricted to licensed banks, registered cash transfer agents and trust companies in Japan.
The brand new legislation also introduces a registration system for banking institutions to issue such digital assets and offers measures against money washing.
Based on the report, the balance aims to safeguard investors and also the economic climate from risks connected using the rapid adoption of stablecoins, which saw its market surging as much as 20 trillion yen, or even more than $150 billion.
The brand new legal framework will apparently work in 2023, with Japan’s Financial Services Agency intending to introduce rules for stablecoin issuers within the coming several weeks.
Japan’s stablecoin bill comes as a direct consequence of the massive decline on cryptocurrency markets fueled through the Terra tokens collapse, using the algorithmic stablecoin Terra USD (UST) losing its 1:1 value towards the U.S. dollar at the begining of May.
The stablecoin market turmoil is not only at the Terra blockchain though as other algorithmic stablecoins like DEI also subsequently lost its dollar peg, plummeting to as little as $.4 at the end of May.