Japan’s FSA approves reforms to ease stablecoin and brokerage regulations

The Japanese Financial Services Agency green lit a report detailing reforms that would ease regulations for stablecoins and crypto brokerage.

According to local media CoinPost, the FSA has approved a a report from a working group recommending policy changes that, if implemented, would ease crypto regulations related to stablecoins and brokerage in the Japan.

The proposed amendments impact two main payment-related laws in the country, the Trust Business Act and the Payment Services Act, as cryptocurrency is still classified as digital payment tools under the local regulations. After receiving criticism from local crypto firms that say Japan’s crypto regulations are too strict, the government now aims to make it easier for businesses to handle crypto assets.

One of the policy changes include a reform that would allow stablecoins to be backed by short-term government bonds and fixed-term deposits in addition to demand deposits. The working group also recommended an upper limit of 50% on the bonds and deposits that can be used as collateral for stabelcoins.

The working group claimed the policy would be able to help issuers “strike a balance between enhanced convenience and safety,” affording them more flexibility in managing funds across multiple products. However, the report mentioned that more mechanisms may be needed to ensure user protection.

Additionally, the working group’s proposal suggested the government should create a new category for “intermediary” crypto businesses or brokerages. Under the current law, firms that only act as brokers in the exchange of crypto assets are expected to complete the same registration requirements as crypto exchange platforms operating in Japan.

This means that even crypto brokerages need to apply for a virtual asset service provider license, just like domestic crypto exchanges. Under the new recommendation, intermediaries would be subject to their own requirements and anti-money laundering obligations.

The report stated that this regulatory change is expected to make it easier for crypto firms to enter the Japanese market.

Earlier this month, the Japanese FSA declared it was considering changing how cryptocurrencies are classified under Japanese law. The financial watchdog plans to classify them as financial products, similar to securities rather than payment tools. The final decision will reportedly be announced in June 2025.