Over the weekend, Japan became one of the first nations to pass a landmark law that clarifies the legal status of stablecoins.

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The bill, drafted by Japan's Financial Services Agency (FSA), was first announced in December 2021 and passed Parliament in March before being approved by a majority of House of Councillors members during a plenary session on Friday.

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First reported by Bloomberg, the law defines stablecoins as digital money. All stablecoins in the country must be pegged to the yen or another legal tender. They must also guarantee holders the right to redeem them at face value.

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Additionally, under the law, the issuance of stablecoins will be limited to registered banks, money transfer agents, trust companies, and other established financial institutions in Japan.

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The new legal framework will reportedly take effect in 2023, with the FSA planning to introduce regulations for stablecoin issuers in the coming months.

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