Japan’s financial regulator has opened a public consultation on new rules that would define which bonds can be used as reserve assets for regulated stablecoins, marking another step in the country’s effort to build a clear and trusted framework for digital payments.
In a statement released Monday, the Financial Services Agency (FSA) said the draft rules form part of a wider set of regulatory notices linked to amendments to the Payment Services Act scheduled to take effect in 2025. The consultation focuses on how reserve assets should be managed for stablecoins issued through trust-based structures, a model currently permitted under Japanese law.
The proposed changes stem from Act No. 66 of 2025, which was enacted in June last year and updated Japan’s rules on settlement and electronic payment instruments. Public feedback on the draft notices will be accepted until February 27, 2026.
Clearer standards for stablecoin reserves
At the center of the proposal are stricter standards on what qualifies as acceptable collateral for stablecoin reserves. According to a draft FSA notice, only certain foreign-issued bonds would be eligible, and they must meet two key conditions.
First, the bonds must carry a high credit rating, equivalent to a credit risk category of “1–2” or higher from a designated rating agency. Second, the total amount of bonds issued by the foreign issuer must reach at least 100 trillion yen, roughly $648 billion. The thresholds are designed to limit reserve assets to highly liquid and creditworthy instruments.
The draft notices also aim to clarify how “specified trust beneficiary interests” can be invested. This legal structure is used by stablecoin issuers under Japan’s payments law and plays a central role in how reserves are held and managed.
New guidance for crypto intermediaries
Alongside reserve asset rules, the FSA has proposed updated administrative and supervisory guidelines for banks, insurance companies, and their subsidiaries involved in crypto-related services.
One notable addition addresses customer communication. If a subsidiary of a traditional financial group offers cryptocurrency intermediation services, it must provide clear explanations to clients about the associated risks. The regulator said this is meant to prevent customers from assuming that crypto products are safer simply because they are offered under the umbrella of a well-known financial institution.
The draft package also introduces additional checks for firms seeking to handle foreign-issued stablecoins. Applicants would need to confirm that the overseas issuer does not plan to issue, redeem, or actively market stablecoins to general users in Japan. The FSA noted it would work with foreign regulators to exchange information about such instruments and their issuers.
Part of a broader stablecoin push
The consultation reflects Japan’s broader effort to develop a regulated and transparent stablecoin market. In recent months, activity in the sector has picked up.
In October, local fintech company JPYC launched what it described as Japan’s first legally recognized yen-backed stablecoin. At the same time, the country’s three largest banking groups—MUFG, SMBC, and Mizuho—have been testing stablecoins and tokenized deposits for use in payments, interbank settlements, and institutional financial services. These pilot projects received formal support from the FSA in December.
By tightening reserve standards while expanding oversight of intermediaries, the regulator appears to be aiming for a balance: encouraging innovation in digital payments while reinforcing safeguards for users and the financial system.
Looking ahead
With the public consultation now open, industry participants, financial institutions, and other stakeholders have an opportunity to weigh in on how Japan’s stablecoin rules should take shape. The feedback could influence how reserve assets are defined and how cross-border stablecoins are handled once the revised Payment Services Act comes into force.
As stablecoins become a more visible part of global finance, Japan’s approach may offer a model for combining innovation with cautious regulation—an approach that prioritizes stability without closing the door on new forms of digital money.
