FSA public consultation on japan stablecoin rules sharpens focus on reserves and intermediaries

Japan is tightening oversight of digital payment instruments as regulators refine the japan stablecoin framework and its links to the traditional financial system.

New guidelines on stablecoin reserve assets

The Financial Services Agency (FSA) has opened a public consultation on draft guidelines defining which bonds can serve as reserve assets for regulated stablecoins under upcoming amendments to the Payment Services Act.

The proposal targets reserves held by issuers using trust structures, legally classified in Japan as specified trust beneficiary interests. Under the draft, only a narrow set of foreign-issued bonds would qualify, aiming to keep backing assets both secure and transparent.

To be eligible, these foreign issued bonds must satisfy two strict conditions. First, they need a high credit rating, assessed as credit risk category 1–2 or better. Second, the issuer must have at least ¥100 trillion (about $648 billion) in outstanding bonds.

According to regulators, the goal is to ensure stablecoin reserves rely on highly liquid and reliable assets. This structure, they argue, limits both credit and liquidity risk, while strengthening confidence in stablecoin reserve rules for investors and institutions.

Stronger crypto intermediary oversight

Alongside the reserve framework, the FSA has updated supervisory guidelines for banks, insurance companies, and their subsidiaries that offer digital asset services. This marks another step toward more robust crypto intermediary oversight in the country.

A new clause obliges subsidiaries that provide cryptocurrency intermediation to clearly explain the risks of these products to clients. Moreover, the rule seeks to prevent users from assuming an asset is low-risk solely because it is distributed by a well-known financial group.

That said, the authority is not blocking innovation. Instead, it is pushing major financial institutions to adopt consistent disclosure standards when marketing crypto products, including any stablecoin japan offerings and related services.

Additional checks for foreign stablecoins

The draft framework also tightens scrutiny of entities wishing to handle foreign-issued stablecoins inside Japan. As part of the application process, firms must show that the overseas issuer is not issuing, redeeming, or marketing these tokens to general users in the country.

This requirement is intended to clarify responsibilities between local intermediaries and foreign issuers. Moreover, it is expected to reduce regulatory blind spots around cross-border products and their circulation among retail users.

To support enforcement, the FSA plans to deepen cooperation with foreign regulators. The agency intends to share information on stablecoin issuers, reserve structures, and product designs, reinforcing foreign stablecoin requirements and cross-border supervision.

Timeline and legislative background

The fsa public consultation will remain open until February 27, 2026. It underpins Act No. 66 of 2025, adopted in June 2025, which updates Japan’s rules for payments and electronic settlement instruments.

After the consultation closes, authorities will finalize the guidelines and publish the official rules. However, enforcement will begin only once all administrative procedures are completed, giving market participants some time to adjust operations.

This staged process is designed to offer clarity to issuers, intermediaries, and institutional users. That said, it also signals that regulators expect firms to start preparing compliance systems well before the final rulebook takes effect.

Building a compliant yet open stablecoin market

The current initiative forms part of a broader national strategy to develop a compliant, institution-friendly stablecoin ecosystem. Authorities aim to make japan stablecoin products accessible to banks and corporates without weakening consumer protection or financial stability.

In October, a fintech company issued a legally recognized yen backed stablecoin, highlighting how the framework can support new forms of digital money. Moreover, the move demonstrated how licensed actors can experiment under strict oversight.

Japan’s three megabanks, MUFG, SMBC, and Mizuho, are also testing stablecoins and tokenized deposits for payments and interbank settlement. These pilots, conducted with formal FSA backing, are expected to inform future refinements to the law and supervisory practice.

Together, the consultation on reserve assets, tighter oversight of intermediaries, and live testing by major banks show how Japan is methodically shaping its digital currency landscape. The aim is a stablecoin market that balances innovation with rigorous safeguards for investors, users, and the wider financial system.