Japan is moving towards reforming its cryptocurrency oversight as the Financial Services Agency (FSA) prepares to introduce major updates in the regulation of stablecoins and crypto brokerage firms.

According to a local media report dated February 19, 2025, “the policy includes allowing stablecoins to be backed by short-term government bonds and certain fixed-term deposits in addition to the current demand deposits.”

🚨 Japan’s FSA Approves Stablecoin Reform – Key Changes Coming in 2025 🇯🇵
📌 Stablecoin Backing:
✔️ Backed by government bonds, term & demand deposits
✔️ Max 50% cap on bonds & deposits as collateral
📌 Crypto Intermediaries:
✔️ Separate registration for brokerage firms
✔️ No need to… pic.twitter.com/k0XvPNrpgL — Stabolut (@stabolut) February 20, 2025

The objective of the new policy is to establish a 50% cap on the proportion of new assets that can be integrated, striking a balance between enhanced convenience and safety.

Countering Lengthy, Stringent Requirements

Currently, Japanese crypto brokers face tough requirements under the same licensing system as exchanges. This complex process deters many firms from market entry. Critics argue that brokerages, which are intermediaries rather than custodians, shouldn’t be held to the same rigorous standards as exchanges.

In response, a working group appointed by the FSA has suggested creating a new regulatory category specifically for intermediary crypto businesses with simplified requirements and tailored anti-money laundering (AML) rules. This is anticipated to lower barriers for many players, including gaming companies and wallet providers, potentially leading to increased innovation in Japan’s cryptocurrency sector.

Future Considerations

Japan is also contemplating the approval of Bitcoin spot exchange-traded funds (ETFs) and is revisiting how cryptocurrencies are classified, possibly subjecting them to stricter financial regulations similar to securities. Legislative changes might be introduced by 2026, with the FSA planning to detail its policy direction as early as June 2025, suggesting adjustments in crypto taxation, which could greatly benefit investors.