Japan Opens Consultation on Stablecoin Reserve Asset Rules

• Japan opens public consultation on stablecoin reserve rules under revised payments law.
• Draft restricts stablecoin reserves to high-grade foreign bonds to limit credit risk.
• FSA updates the supervision framework for stablecoins, banks, and crypto intermediaries.

Japan’s financial regulator has opened a public consultation on draft rules governing stablecoin reserve assets under its revised payments law. The move marks a further step in Japan’s structured approach to digital asset regulation. The consultation focuses on reserve management, supervisory updates, and compliance rules for trust-based stablecoins.

The Financial Services Agency released the draft regulatory notices on Monday. The proposals are linked to amendments made to the Payment Services Act in 2025. Those amendments reshaped Japan’s legal framework for settlement services and electronic payment instruments, including stablecoins and crypto intermediaries.

Draft Rules Clarify Stablecoin Reserve Asset Standards

According to the FSA, the draft clarifies how stablecoin reserve assets may be invested. The rules apply to stablecoins issued using “specified trust beneficiary interests.” This structure is already permitted under Japan’s payments law and is commonly used by regulated issuers.

The consultation would remain open until February 27, 2026. The draft implements Act No. 66 of 2025, which was enacted in June last year. That law introduced revisions aimed at strengthening oversight of payment-related services and digital value instruments.

A central part of the proposal concerns eligible collateral for stablecoin reserves. The FSA plans to restrict reserve assets to specific foreign-issued bonds. The regulator described the approach as conservative and aligned with financial stability goals.

The first condition relates to credit quality. Eligible bonds must hold a high credit rating. The rating must correspond to a “1–2” credit risk category or higher, as determined by a designated rating agency.

The second condition relates to issuer size. The foreign issuer must have at least 100 trillion yen in outstanding bonds. This amount is equivalent to about $648 billion at current exchange rates.

These standards apply directly to reserve assets backing regulated stablecoins. The FSA stated that the criteria aim to limit credit and liquidity risks. The agency also noted consistency with Japan’s broader financial regulatory principles.

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Alongside reserve asset rules, the FSA issued revised supervisory guidelines. These guidelines apply to banks, insurance companies, and their subsidiaries. 

Foreign Stablecoins and ETF Plans Mark Japan’s Broader Crypto Shift

The regulator also addressed foreign-issued stablecoins. Businesses seeking approval to handle these assets must meet additional disclosure requirements. Applicants must explain that the foreign issuer would not issue, redeem, or solicit stablecoins to general users in Japan.

The FSA said it would coordinate with overseas regulators. Information sharing would focus on foreign stablecoin instruments and their issuers. The agency framed this as part of cross-border supervisory cooperation.

The consultation reflects Japan’s broader effort to build a regulated stablecoin ecosystem. Authorities have emphasized legal clarity and consumer protection. Stablecoins are being positioned within existing financial frameworks.

In October, local fintech firm JPYC launched a yen-backed stablecoin. The company described it as Japan’s first legally recognized stablecoin. The launch followed alignment with trust and payments regulations.

Japan’s three megabanks have also advanced pilot projects. MUFG, SMBC, and Mizuho are testing stablecoins and tokenized deposits. These pilots focus on payments, interbank settlement, and institutional financial services.

The FSA formally supported these initiatives in December. The backing allowed experimentation within defined regulatory boundaries. Officials described the projects as infrastructure oriented.

Japan is also reviewing its stance on crypto exchange-traded funds. Nikkei reported that cryptocurrencies may be added to assets eligible for spot ETFs. Approval could occur as early as 2028.

Such approval would end Japan’s ban on spot crypto ETFs. Earlier expectations suggested a longer delay. A KPMG Japan executive stated in August 2025 that a Bitcoin ETF launch could slip to 2027.

Investor demand remains visible. Nomura Holdings executive Hajime Ikeda cited survey data at the time. The survey showed that more than 60% of Japanese investors want crypto exposure.

Nikkei reported that Nomura Holdings and SBI Holdings are developing ETF products. These products are awaiting regulatory approval. If approved, they would be listed on the Tokyo Stock Exchange.