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The Cabinet of Japan has approved a proposal to amend the Payment Services Act, aiming to ease regulations for stablecoins and crypto brokerages. This move could potentially pave the way for more flexible operations within Japan’s crypto market and attract new players to the industry.

Key Developments in the Proposal

According to an announcement by Japan’s Financial Services Agency (FSA), the bill has received Cabinet approval and has been submitted to the National Diet for further deliberation. The proposal, previously endorsed by the FSA, represents a significant step toward streamlining crypto regulations in the country.

The process of passing a bill in Japan involves multiple steps. First, it must secure a majority vote from Cabinet members, led by the Prime Minister. Once approved by the Cabinet, the bill is submitted to the National Diet, where it undergoes scrutiny by relevant committees. These committees examine, debate, and may amend the proposal before introducing it to the full legislative chambers. If both the House of Representatives and the House of Councillors approve the bill, it proceeds to the Emperor for ceremonial promulgation, formalizing it into law.

Proposed Changes to Stablecoin Regulations

The new bill introduces significant updates to how stablecoins can be collateralized. Currently, stablecoin issuers in Japan are required to maintain a one-to-one ratio of circulating tokens to cash deposits held in regulated bank accounts. The proposed amendment allows issuers to use additional types of assets as collateral, such as short-term government bonds and fixed-term deposits.

  • Stablecoins can now be backed by Japanese or U.S. government bonds with a remaining maturity of three months or less.
  • An upper limit of 50% has been set for the proportion of government bonds and deposits that can be used as collateral.

This adjustment provides issuers with greater flexibility while maintaining a robust framework to ensure financial stability. By broadening the range of acceptable collateral, Japan aims to support the growth of the stablecoin market while adhering to stringent regulatory standards.

New Regulations for Crypto Brokerages

The bill also establishes a distinct category for intermediary crypto businesses, such as crypto brokerages. Currently, these firms are required to meet the same registration criteria as crypto exchange platforms, which can be a significant hurdle.

Under the new framework:

  • Crypto brokerages will operate under a separate set of licensing requirements tailored to their specific activities.
  • They will also comply with anti-money laundering (AML) obligations designed for intermediaries, rather than being grouped with exchange platforms that have different operational structures.

This separation aims to simplify the regulatory process for brokerages, encouraging more players to enter the Japanese market while maintaining compliance with global financial standards.

Implications for Japan’s Crypto Market

The proposed amendments reflect Japan’s commitment to fostering innovation in the cryptocurrency sector while ensuring strong regulatory oversight. By easing restrictions on stablecoins and creating a dedicated framework for crypto brokerages, the government is positioning Japan as a more attractive destination for blockchain and crypto-related businesses.

These changes could lead to increased participation from both domestic and international firms, further strengthening Japan’s position as a leader in the global cryptocurrency space. Investors and businesses interested in the Japanese market should closely monitor the progress of this bill through the National Diet.

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