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Japan's Regulator Moves Forward with Stablecoin and Crypto Brokerage Reforms

The Japanese Financial Services Agency (FSA) is set to implement reforms improving the regulation of stablecoins and crypto brokerages. This decision follows the approval of a report by a working group focused on reforming crypto legislation. Currently, Japanese crypto brokerages face rigorous requirements to obtain virtual asset service provider (VASP) licenses, prompting calls for tailored licences for intermediary services. The proposed changes will streamline regulatory processes and shift specific responsibilities to exchanges, token issuers, and custody firms. Additionally, the reforms will permit stablecoin issuers to use short-term government bonds and fixed-term deposits as part of their collateral, with a cap at 50%. These steps are intended to balance user safety with market flexibility, potentially enhancing profitability and liquidity for stablecoin issuers. The FSA’s initiatives aim to make the crypto environment more accessible and secure, reflecting lessons from the FTX collapse and fostering greater protection for crypto exchange customers.