In a significant move towards crypto regulation reform, Japan’s Financial Services Agency (FSA) has approved a new report that aims to relax existing rules for stablecoins and cryptocurrency brokerages. This latest step comes as part of the country’s ongoing efforts to modernize its approach to digital assets, with hopes of fostering a more business-friendly environment for crypto firms.
According to local news outlet CoinPost, the FSA’s approval of the report paves the way for changes to two key pieces of legislation: the Trust Business Act and the Payment Services Act. These laws currently classify cryptocurrency as a form of digital payment, a classification that has long drawn criticism from local businesses claiming Japan’s crypto regulations are overly restrictive. The proposed amendments seek to ease these regulations, ultimately making it simpler for businesses to handle digital assets within the country.
Key reforms include a change in how stablecoins can be backed. The working group behind the proposal recommends that stablecoins could be backed not only by demand deposits, but also by short-term government bonds and fixed-term deposits. This adjustment would allow issuers greater flexibility while maintaining stability. The report suggests limiting the bonds and deposits used for backing stablecoins to 50% of the total collateral, helping issuers strike a balance between convenience and security. However, further mechanisms may be introduced to ensure that user protection remains a top priority.
In another noteworthy proposal, the working group suggests introducing a new category for crypto businesses acting as intermediaries or brokerages. Currently, crypto firms in Japan that only facilitate exchanges of digital assets must adhere to the same registration requirements as full-fledged crypto exchanges. This means even brokerages must apply for a virtual asset service provider license. The new recommendation aims to simplify the process for intermediaries, with tailored requirements and anti-money laundering obligations, which could ease entry for smaller firms looking to establish themselves in Japan’s competitive market.
This reform could have a significant impact on the country’s crypto landscape. Not only would it streamline the regulatory process for businesses, but it could also help Japan maintain its reputation as a global leader in digital finance.
Earlier this month, the FSA also indicated it might revise how cryptocurrencies are classified under Japanese law, possibly treating them more like securities rather than digital payment tools. A final decision on this change is expected by June 2025.
With these reforms, Japan is clearly positioning itself as a crypto-friendly hub, offering more opportunities for innovation and growth in the rapidly evolving digital asset space.
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