Japan lower house passes stablecoin investor protection bill News
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Japan lower house passes stablecoin investor protection bill

Japan’s House of Representatives Friday passed the first-ever stablecoin investor protection bill, regulating who is able to issue them and how they are linked to an existing tender. Stablecoins are a unique type of cryptocurrency, with their value directly tied to an outside asset such as legal tender or commodities, in order to create more stability in the market.

Stablecoins have recently gained popularity, as other cryptocurrencies have experienced extreme highs and lows and investors are looking for safer crypto-investments. However, concerns have been raised after popular stablecoin TerraUSD collapsed,  resulting in massive losses for investors.

The Japanese bill hopes to address the root causes of the TerraUSD crash and protect investors by defining stablecoin, limiting which tender it is linked to, regulating how it will be linked to that tender and preventing anyone other than licensed agents from issuing it. However, the bill will not cover existing asset-backed or algorithmic stablecoins, meaning that any stablecoins that are currently on the market are excluded from the new regulations.

With the passage of this bill, Japan became one of the first major economies to introduce a stablecoin-related legal framework.