Japanese Financial Services Agency Approves Reforms to Ease Crypto Regulations
Tokyo, Japan – The Japanese Financial Services Agency (FSA) has approved a report outlining significant reforms aimed at relaxing regulations surrounding stablecoins and crypto brokerage services in the country. This decision comes after mounting criticisms from local crypto firms, which have argued that current regulations are overly stringent.
According to local media outlet CoinPost, the approved report was developed by a working group that recommended specific policy changes to enhance the operational landscape for cryptocurrency within Japan. These amendments primarily target two key laws: the Trust Business Act and the Payment Services Act, under which cryptocurrencies are currently categorized as digital payment tools.
Proposed Amendments and Their Implications
The reform package suggests several amendments that are expected to foster a more accommodating environment for businesses involved in crypto assets. One of the notable proposals includes allowing stablecoins to be backed not only by demand deposits but also by short-term government bonds and fixed-term deposits. However, the working group has recommended a stipulation that limits the backing to a ceiling of 50% for these bonds and deposits, striking a balance between enhanced convenience and user safety.
The working group emphasized that the flexibility in managing funds across diverse products would benefit issuers while also highlighting that additional mechanisms may be necessary to ensure the protection of users engaged in crypto transactions.
New Classification for Intermediary Crypto Businesses
Another significant aspect of the report involves the creation of a new classification for "intermediary" crypto businesses or brokerages. Presently, firms that act solely as brokers for the exchange of crypto assets are required to adhere to the same registration standards as full-fledged crypto exchange platforms. This has created a cumbersome regulatory environment for brokerage operations.
Under the proposed changes, intermediaries would be allowed to operate under a distinct set of regulations and obligations, specific to their role as brokers. This includes separate requirements for compliance with anti-money laundering practices, thus simplifying the regulatory burden for crypto brokerages and potentially easing their entry into the Japanese market.
Future Developments in Crypto Regulation
This recent move by the FSA aligns with earlier indications from the agency that it is contemplating a broader reclassification of cryptocurrencies. In early October, the FSA announced intentions to potentially categorize cryptocurrencies as financial products, akin to securities, rather than just digital payment methods. A final decision regarding this pivotal change is anticipated to be released in June 2025. As Japan aims to strike a more favorable balance between regulation and innovation in the cryptocurrency sphere, these reforms signify a progressive step towards revitalizing the nation’s crypto landscape. The changes are expected to attract both domestic and foreign firms, encouraging greater participation in a market that has seen significant growth in recent years.
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