Japan's Crypto Bill Aims to Boost Market Entry, Flexibility for Stablecoin Issuers

Japan is on the brink of significant changes in its cryptocurrency regulatory landscape with the introduction of a new bill aimed at amending the Payment Services Act. The bill, which has already received endorsement from the nation's Cabinet, is set to be debated and voted on in the National Diet. If passed, the reforms will provide greater flexibility for stablecoin issuers and establish a distinct regulatory framework for crypto brokerages.

The Financial Services Agency (FSA) has forwarded the bill to the Diet, following its initial approval. The primary goal of these reforms is to streamline the entry of crypto companies into Japan's market while maintaining robust oversight. One of the key provisions of the bill is the expansion of collateral options for stablecoin issuers. Previously, issuers were required to maintain a 1:1 cash deposit in regulated bank accounts. Under the new regulations, issuers can collateralize their tokens with a broader range of assets, including Japanese and American government bonds with a maturity of three months or less. However, these bonds can only constitute up to 50% of a stablecoin's reserve holdings, with the remaining assets stored in current accounts.

Another notable aspect of the bill is the creation of a new intermediary class for crypto brokerages. Currently, brokerage companies are subject to the same registration standards as crypto exchanges, including the requirement to obtain a virtual asset service provider license. The proposed reforms would impose different obligations on intermediaries, focusing on compliance and anti-money laundering regulations, rather than the more stringent requirements applied to exchanges.

The legislative process for the bill involves several steps. It must first be studied and potentially amended by an appropriate committee before being voted on by the House of Representatives and the House of Councillors. Once approved by both chambers, the bill will be submitted to the Emperor for formal promulgation, thereby implementing the reforms.

These proposed changes align with Japan's broader efforts to create a more inclusive digital asset regulatory environment that ensures financial stability and consumer protection. If enacted, the bill could open new opportunities for crypto companies, positioning Japan as one of Asia's leading digital asset economies. The reforms are designed to balance the need for regulatory oversight with the desire to foster innovation and growth in the cryptocurrency sector, potentially attracting more players to the market and enhancing Japan's standing in the global digital asset landscape.