Japan has approved new stablecoin regulations to increase collateral flexibility and improve user protection during bankruptcy proceedings.
Japan Approves Measures to Enhance User Protection in Stablecoin Market
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Japan Aims to Protect Users
The Japanese Financial Services Agency (FSA) has approved measures to make stablecoin collateral management more flexible. The approval also aims to make it easier to protect Japanese users from the transfer of their assets from the local subsidiary of a foreign-owned cryptocurrency exchange platform during bankruptcy proceedings.
According to a Coin Post report, the proposed stablecoin collateral management allows digital assets to be backed by short-term government bonds and certain fixed-term deposits, in addition to current demand deposits. The report adds that the objective is to set an upper limit of 50% on the amount of new assets that can be incorporated.
Under this regime, stablecoin issuers targeting the Japanese market will be able to manage their funds across several financial products, which in turn boosts their profitability and liquidity. Depending on the system design, additional mechanisms may be necessary to ensure adequate user protection, the report added.
Japanese Finance Minister Katsunobu Kato reportedly lauded the steps taken to further enhance the protection of digital asset users.
“I want to create an environment in which users can use highly convenient remittance settlement services with peace of mind,” Kato reportedly said.
Approval of these measures enables the FSA to begin the process to partially revise the Trust Business Act and amend the Payment Services Act.
Meanwhile, the proposed regulatory change would create a new “intermediary business” category, easing registration requirements and anti-money laundering obligations for businesses that facilitate cryptocurrency transactions but do not hold user assets.
