Japan’s FSA Introduces New Stablecoin Rules to Enhance User Protection

Japan’s Financial Services Agency (FSA) has approved new regulations to strengthen stablecoin collateral management and improve user protection in the cryptocurrency sector. This move follows growing concerns over digital asset security, particularly for users of foreign-owned exchanges.

The new framework allows stablecoin issuers to diversify backing assets beyond demand deposits. Now, issuers can hold short-term government bonds and fixed-term deposits, though these assets are capped at 50% to ensure stability. This adjustment enhances liquidity and profitability while safeguarding users.

Additionally, the FSA’s changes require stablecoin issuers to introduce mechanisms tailored to their system design, ensuring adequate consumer protection. Japanese Finance Minister Katsunobu Kato endorsed the initiative, emphasizing the importance of secure and convenient remittance and settlement services.

The regulatory updates also introduce an "intermediary business" category, streamlining registration and anti-money laundering requirements for companies that facilitate crypto transactions without holding user assets. This aims to reduce compliance burdens while maintaining security.

The FSA's decision sets the stage for amendments to the Trust Business Act and Payment Services Act, reinforcing Japan’s commitment to fostering a safer and more efficient digital finance ecosystem.