In a significant move for the cryptocurrency landscape, Japan”s Financial Services Agency (FSA) has commenced a public consultation aimed at establishing guidelines for stablecoin reserve assets as part of an overhaul of the payments law set for 2025. This initiative is designed to clarify the regulations surrounding trust-structured stablecoins and enhance investor protections.
The consultation will address how reserve assets should be managed for both domestic and foreign-issued stablecoins. The draft rules specify the types of bonds that can be utilized as collateral for yen-pegged stablecoins, stipulating that eligible foreign-issued bonds must carry a credit rating of 1-2 or higher. Moreover, issuers will be required to ensure that the total amount of bonds issued is no less than 100 trillion yen, approximately $648 billion, to mitigate default risks and bolster investor confidence.
As part of the proposed amendments under the 2025 Payments Services Act, stablecoin issuers may hold up to 50% of their issuance in low-risk assets, including short-term government bonds and fixed-term deposits. The regulations maintain that only licensed banks, trust companies, and registered money transfer agents can serve as issuers. Additionally, foreign stablecoins will require licenses from intermediaries, along with stringent compliance checks to guarantee adherence to domestic regulations and user protection standards.
One notable requirement is that all stablecoin issuers must maintain segregated custody of reserve assets, ensuring that these assets are fully backed and managed securely. This regulation aims to enhance liquidity and profitability for stablecoin issuers while prioritizing user safety.
The FSA”s draft rules reflect a broader trend in stablecoin regulation globally, with various countries, including the United States and members of the European Union, exploring similar frameworks for digital assets. By focusing on innovation while mitigating risks, Japan seeks to maintain its competitive edge in the fintech sector while safeguarding the financial system.
The public consultation will remain open until February 27, 2026, providing industry stakeholders, financial institutions, and the general public an opportunity to contribute feedback. The FSA encourages active participation in reviewing the draft notices, which will help refine the final regulations.
Overall, these reforms under the upcoming Payments Services Act aim to enhance Japan”s digital payment infrastructure. By balancing operational flexibility with high compliance standards, the FSA is fostering responsible stablecoin adoption, ensuring the security and transparency of reserve assets for both domestic and international users. As global interest in stablecoins continues to rise, Japan”s proactive stance may serve as a blueprint for other regulatory bodies to emulate.
