Japan Sets Bold Regulations for Stablecoin Reserves and Digital Payments

Bond Standards for Stablecoin Reserves

The Financial Services Agency released a statement on Monday, sharing a series of draft regulatory notifications related to amendments made to the Payment Services Act in 2025. These drafts detail the management of reserve assets for regulated stablecoins issued through trust structures. The framework explicitly defines which assets can be directed by the investment structure called “specific trust beneficiary interests” used by stablecoin issuers.

The draft regulations impose strict criteria on bonds accepted as reserve assets. Only bonds issued by foreign issuers with high credit ratings will be deemed suitable. Such bonds must be classified with a “1–2” or higher rating and the foreign issuer’s total stock of bonds should be at least 100 trillion yen. Authorities emphasize that these thresholds aim to maintain the reserves’ liquidity and reliability.

The public consultation process will continue until February 27, 2026. The drafts implement the details of the 2025 law, which updated the framework for payment and electronic payment instruments, approved in June 2025. Once completed, a clearer and more predictable reserve regime for stablecoin issuers is anticipated.

Intermediary Rules and Japan’s Stablecoin Strategy

The draft package is not limited to reserve standards. It also includes new administrative and supervisory guidelines for banks, insurance companies, and their subsidiaries. A new provision requires subsidiaries that offer cryptocurrency intermediary services to clearly inform customers about risks. The aim is to prevent the perception that being part of a traditional financial group lowers a product’s risk profile.

Additional obligations are introduced for businesses wishing to transact with foreign stablecoins. Applicants must state that the foreign issuer will not engage in issuance, redemption, or marketing activities aimed at general users in Japan. The Financial Services Agency also mentions sharing information about such assets and issuers with overseas regulators.

These steps align with Japan’s goal of controlled growth in the stablecoin sector. In October, local fintech company JPYC launched Japan’s first legally recognized yen-backed stablecoin. Simultaneously, Japan’s three major banks, MUFG, SMBC, and Mizuho, rolled out stablecoin and tokenized deposit pilot projects involving payments, interbank settlements, and corporate financial services. These initiatives received official support from the regulatory body in December.