Japan passes landmark stablecoin bill. Will the crypto confidence be restored?

economictimes.indiatimes.com:

The parliament of Japan passed the bill on Friday, giving investors a cushion after multi-billion dollars were wiped out from their pockets. Japan is one of the first major economies to pass specific laws over cryptos, stablecoins in particular. However, the legislation will come into effect after a year.

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The bill provides a clear definition of stablecoins, which will now be considered as digital money, if they fulfil the condition of being linked with yen or any other legal tender, guaranteeing holders the right to redeem them at face value. Japan has been cautious regarding stablecoins since 2021, said Edul Patel, CEO and Co-founder of Mudrex. «It is the right move to ensure investors’ safety, as algorithmic-based stablecoins are still at the experimental stage, volatility becomes inevitable and may keep investors at risk.» A stablecoin is a type of cryptocurrency whose value is tied to an outside asset, such as the US dollar, any other currency or gold, to stabilize the price. Some common stablecoins include Tether and USD Coin. One should note that crypto exchanges in Japan do not list stablecoins and they can only be issued by a licensed bank, registered money transfer agent or a trusted company. The bill does not address the asset-backed algorithmic stablecoins. However, Patel from Mudrex has a critical opinion on the move. «It could lead to multiple issues surrounding liquidity in trading pairs, inflation and different situations that crypto and blockchain stand against,» he said. Adding to it, Sathvik Vishwanath, Co-Founder & CEO,