Japan Eases Crypto Regulations Boosting Brokerages and Stablecoins

The Japanese government has recently approved significant reforms to the regulations governing crypto brokerages and stablecoins. The Cabinet has given its approval to amend the Payment Services Act, which is now set to be finalized by the National Diet. This move is expected to pass without opposition, as the Japanese parliament has a history of supporting crypto-related legal changes endorsed by the Cabinet.

The proposed amendments aim to streamline the regulatory environment for crypto companies. One of the key changes is the introduction of a new category for crypto brokerages, allowing them to operate as “intermediary businesses.” This means that brokers will no longer need to obtain the same permits as crypto exchanges and wallet operators, thereby lowering the barrier to entry for new players in the market.

Additionally, the reforms will provide more flexibility for stablecoin issuers. Currently, Japanese firms are required to back their stablecoins with a 1:1 ratio of cash deposits in regulated bank accounts. The new bill will allow issuers to use a broader range of assets, including certain Japanese and US government bonds, to back their stablecoins. However, there are restrictions: only bonds with a remaining maturity of three months or less will be eligible, and stablecoin issuers can use bonds to back their coins by a maximum of 50%. The remainder must be held in current accounts.

Another notable change is the exemption of crypto brokerages from certain financial requirements and anti-money laundering regulations. To qualify for these new licenses, brokerages will need to demonstrate that they do not directly handle any of their clients’ funds. This relaxation of regulations is expected to attract more businesses to enter the crypto brokerage market, with some of the region’s largest and most crypto-keen companies already expressing interest.

These reforms are part of a broader effort by the Japanese government to position the region as a global hub for cryptocurrency and blockchain technologies. By simplifying the regulatory framework and providing more flexibility for crypto companies, Japan aims to foster innovation and attract more investment in the digital asset space. The amendments are expected to be approved by the National Diet in the coming days, paving the way for a more dynamic and competitive crypto market in the region.