Japan plans to ease stablecoin rules, allowing new backing methods and reducing compliance burdens for intermediaries.
Japan is set to ease regulations on stablecoins and crypto transactions. The Financial Services Agency (FSA) gave its approval to a report that suggests modifications to current statutory regulations. The intended modifications will both raise financial adaptability and defend digital asset ownership for users.
The payment-related proposal addresses two key legislations: the Trust Business Act and the Payment Services Act. Modern-day laws classify cryptocurrency as a digital payment instrument. Local crypto businesses expressed problems due to restrictive safety measures implemented by regulators. The government plans to restore simplicity to crypto asset business operations.
The Financial System Council adopted the report after conducting ongoing sessions between August 2024. The discussions analyzed rules connected to payment service operations along with remittances as well as stablecoin and cryptocurrency standards.
Before this, businesses involved in crypto transaction mediation needed to register according to strict guidelines. Firms that did not handle user assets were included in this regulation. The introduction of “intermediary business” represents a proposed solution to counter this issue. Introducing this regulation would increase flexibility in compliance standards through measures that support anti-money laundering rules.
FSA Approves Legal Changes for Stablecoin and Payment Laws
Intermediaries who do not hold client assets are exempt from rigorous financial requirements. Crypto exchanges along with issuers remain accountable for user fund security measures but registration requirements do not extend to all firms involved with cryptocurrencies. Moving forward, game firms and digital wallet companies could have better opportunities to join the market under this proposed change.
The framework under consideration modifies the criteria on which backing stablecoins can be based. The existing regulations only permit demand deposits as the backing method for stablecoins. According to the new proposal, stablecoin issuers can sustain their reserves through both short-term government bonds and fixed-term deposits. The stability of the financial sector requires that stablecoin issuers use these new assets for backing purposes not exceeding 50%.
These modifications grant stablecoin issuers better fund management capabilities. To achieve user security the implementation of additional protective structures becomes necessary.
After report approval, the Financial Services Agency plans to start carrying out legal modifications. The Trust Business Act receives revisions while the Payment Services Act undergoes amendments. The finance minister Katsunobu Kato supported the plan which highlighted the necessity of implementing a digital payment system that ensures both safety and efficiency.
