Japan Approves Crypto Brokerage, Stablecoin Law Reforms

Japan has approved major reforms to its cryptocurrency regulations, impacting crypto brokerages and stablecoin laws.

The country's Financial Services Agency (FSA) has stated that the Cabinet has signed off on a decision to amend the Payment Servies Act, which will go before the National Diet, where it is expected to be approved.

In the past, the Diet has not voted against crypto-related legal amendments that were approved by the Cabinet, which has always endorsed the FSA’s regulatory proposals without objection.

Under the proposed amendments, crypto brokerages will be classed as "intermediary businesses," meaning that these brokers will not need to obtain the same permits as crypto exchanges or wallet operators. This will ease the entry barriers for companies to facilitate in crypto transactions.

Stablecoin issues will see greater flexibility in how they back their digital currencies. As it stands, firms must match the supply of stablecoins 1:1 with cash deposits in regulated banks but the new amendments would allow issuers to use certain Japanese and U.S. government bonds with a remaining maturity of three months or less can be as collateral instead.

Issuers can place funds in fixed-term, high-interest bond accounts that allow early cancellation, but no more than 50% of the stablecoin reserves can be backed by bonds—the remainder must be held in current accounts.

The bill also seeks to remove financial and anti-money laundering (AML) requirements for crypto brokerages, which will lower the barrier to entry for new players.

Brokerages must demonstrate that they do not directly handle customer funds to qualify for this. Mercari, SBI Securities, and Monex Securities, are already preparing to launch brokerage services.