Japan has taken a major step forward in the cryptocurrency sector by approving new regulations designed to transform the operations of crypto brokerages and stablecoin issuers. The Financial Services Agency (FSA) revealed that the Cabinet has approved amendments to the Payment Services Act, which are expected to pass smoothly through the National Diet. This development aims to improve the country's crypto market by reducing barriers for new entrants and offering more flexibility to stablecoin issuers.
 

Key Highlights:
 

  • Regulatory Updates: Crypto brokerages will now be categorized as “intermediary businesses,” simplifying the permit process.
  • Stablecoin Flexibility: Issuers can now use government bonds, rather than just cash deposits, to back stablecoins.
  • Lowered Barriers: Financial and anti-money laundering (AML) requirements will be relaxed for brokerages.
  • Market Impact: Big companies such as Mercari and SBI Securities are preparing to launch new brokerage services.
     

New Classification for Crypto Brokerages

Under the revised regulations, crypto brokerages will no longer be required to obtain the same permits as traditional crypto exchanges or wallet operators. This shift to classifying them as intermediary businesses is expected to make it easier for new companies to enter the crypto market, encouraging innovation and healthy competition.
 

Changes to Stablecoin Issuance Rules

The amendments also bring significant changes to stablecoin issuance. Previously, firms had to maintain a 1:1 cash reserve with regulated banks for every stablecoin issued. Under the new rules, issuers can now use short-term government bonds, specifically Japanese and U.S. bonds with a maturity of three months or less, as collateral. However, there are restrictions:

  • No more than 50% of the stablecoin reserves can be backed by bonds.
  • The remaining reserves must still be held in cash.
     

This added flexibility is expected to improve the liquidity and operational efficiency of stablecoin issuers, potentially boosting the stability of Japan’s stablecoin market.
 

Relaxing Financial Regulations

In a bid to attract more companies to the crypto sector, the FSA has proposed removing certain financial and anti-money laundering (AML) regulations for crypto brokerages. Brokerages that don’t directly manage customer funds may qualify for these exemptions. This change is expected to reduce entry barriers, making it easier for businesses to offer crypto-related services.
 

Industry Reactions

The industry has reacted positively, with major players like Mercari, SBI Securities, and Monex Securities already preparing to launch new brokerage services. These regulatory changes are seen as an important step in positioning Japan as a competitive force in the global cryptocurrency market.
 

Conclusion

Japan’s new crypto regulations are a significant milestone for the country's digital asset sector. By reducing restrictions on brokerages and giving stablecoin issuers more flexibility, Japan is paving the way for increased innovation and growth in its cryptocurrency industry. As the National Diet is set to vote on these amendments, the global crypto community will be watching closely to gauge the impact these changes will have on the market.