Japan’s parliament introduced a legal framework for stablecoins guaranteeing that they are linked to the yen or another fiat currency and that holders have the right to redeem them at face value, Bloomberg reported today.
Governments are looking to ensure protection for stablecoin investors after TerraUSD’s implosion led to multibillion-dollar losses from an asset that had been touted as safe, the report said.
The legal framework for stablecoins will take effect in a year, Bloomberg said. Japan’s Financial Services Agency will devise regulations for stablecoin issuers in the coming months.
Japan’s parliament clarified the legal status of stablecoins as essentially digital money, meaning they can be issued only by licensed banks, registered money transfer agents and trust companies, the report said.