Japan’s Financial Services Agency (FSA) has approved new stablecoins regulations to enhance user protection, increase collateral flexibility, and safeguard assets during crypto exchange bankruptcies. Learn more about the latest policy changes.
Japan’s Financial Services Agency (FSA) has approved new measures to enhance user protection in the stablecoin market, increasing collateral flexibility and improving safeguards during bankruptcy proceedings.
Regulatory Changes to Stablecoins Collateral Management
The newly approved framework allows stablecoin issuers to back digital assets with short-term government bonds and fixed-term deposits, in addition to existing demand deposits. According to a Coin Post report, the updated rules impose a 50% cap on newly incorporated assets, ensuring balanced risk management.
Stablecoin issuers operating in Japan will now have the flexibility to diversify their financial holdings, improving liquidity and profitability while maintaining compliance with regulatory safeguards. However, additional oversight mechanisms may be required to uphold user protection.
Protecting Users from Foreign Crypto Exchange Bankruptcies
The FSA’s decision also strengthens protections for Japanese users in cases where foreign-owned crypto exchanges face bankruptcy. The revised measures aim to prevent the transfer of local subsidiary-held user assets overseas, ensuring they remain within Japan’s jurisdiction during financial crises.
Finance Minister Katsunobu Kato welcomed the reforms, emphasizing their role in fostering trust in digital payment systems.
I want to create an environment in which users can use highly convenient remittance settlement services with peace of mind, Kato stated.
Impact on Crypto Intermediaries
The regulatory update introduces a new “intermediary business” category, easing registration and anti-money laundering obligations for businesses that facilitate cryptocurrency transactions but do not hold user assets. This change is expected to lower entry barriers and encourage innovation in Japan’s crypto sector.
With these approvals, the FSA will now begin revising the Trust Business Act and amending the Payment Services Act to align with the new framework.
Looking Ahead
Japan’s latest regulatory moves underscore its commitment to balancing innovation with investor protection. As global stablecoin markets evolve, Japan’s structured approach may serve as a model for other nations.
For ongoing updates on digital asset regulations, stay informed with the latest industry developments.
