The Financial Services Agency announced a proposed bill to amend the Payment Services Act today, March 7th. The bill is now under review by the Diet. The explanatory materials explain that the amendments will review regulations on crypto assets and stablecoins.
A key feature of the proposal is a requirement for crypto exchange operators to hold assets domestically. This step aims to prevent assets from leaking overseas if an operator handling only physical cryptocurrencies goes bankrupt.
Changes to Stablecoin Backing Assets
The proposed amendment also includes new guidelines for trust-type stablecoins. Backing assets will be allowed to be held in Japanese and U.S. Treasury bonds with a maturity or remaining maturity of three months or less.
Alternatively, stablecoins may be backed by fixed-term deposits that allow mid-term cancellation. However, this is capped at a maximum of 50% of the total issuance amount.
The change is designed to offer more flexibility while ensuring that stablecoins remain secure and stable. Regulators hope these measures will improve the reliability of digital asset services.
Creation of a New Intermediary Business
The bill introduces the concept of an “intermediary business.” This new category is for companies that act solely as intermediaries between crypto exchanges and their users. The intention is to provide clearer regulations for these service providers.
By applying proper oversight to intermediaries, the government aims to create a safer and more efficient market environment. This move is expected to foster innovation and help businesses offer their services with less regulatory friction.
Proposal to Transition Crypto Regulation
Earlier, the Liberal Democratic Party’s Web3 Working Group published a proposal. This proposal calls for the transition of cryptocurrency regulation to the Financial Instruments and Exchange Act.
The ruling party’s proposal suggests establishing a new regulatory framework under the FIEA. If approved, digital assets would be classified as a unique asset class rather than securities.
This change could mark a significant shift in Japan’s approach to crypto regulation. The proposal is seen as groundbreaking and aims to create a clearer legal structure for digital assets.
The proposed changes are a significant step toward modernizing Japan’s digital asset regulations. The amendments to the Payment Services Act and the proposal to transition crypto regulation under the FIEA will likely reshape the market landscape.
These measures are designed to improve the safety and reliability of crypto exchanges and stablecoins. They also aim to support the growth of a thriving digital asset ecosystem in Japan.
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