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The Japanese Financial Services Agency (FSA) sanctioned new measures designed to enhance the management of stablecoin collateral and bolster the protection of Japanese users in the cryptocurrency space.
This regulatory move follows recent concerns about the security of digital assets and aims to provide a safer environment for users interacting with foreign-owned cryptocurrency exchange platforms, especially in the event of bankruptcy.
The FSA’s approval permits stablecoin issuers in Japan to diversify their backing assets. Now, digital assets can be supported by short-term government bonds and certain fixed-term deposits, along with the previously allowed demand deposits.
This change is set to improve the issuers’ ability to manage their funds more effectively across different financial products, potentially increasing their profitability and liquidity. However, an upper limit of 50% has been established on the incorporation of new assets to maintain a balanced approach.
The updated regulations are expected to require stablecoin issuers to implement additional mechanisms depending on their system design. These mechanisms will serve to ensure that adequate user protection is in place, addressing the risks associated with digital currencies.
Japanese Finance Minister Katsunobu Kato has publicly endorsed the FSA’s initiative, emphasizing the importance of creating a secure environment for users who rely on remittance and settlement services.
"I want to create an environment in which users can use highly convenient remittance settlement services with peace of mind," said Kato, highlighting the government’s commitment to consumer protection in the fintech sector.
The endorsement of these measures by the FSA sets the stage for the agency to proceed with amendments to the Trust Business Act and the Payment Services Act.
Additionally, the proposed regulatory updates include the introduction of a new "intermediary business" category. This category will simplify registration procedures and anti-money laundering requirements for businesses that facilitate cryptocurrency transactions without holding user assets, thereby easing the operational burden on these intermediaries.
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