Japan’s Financial Services Agency to Implement Stricter Regulations for Crypto Exchanges
The Financial Services Agency (FSA) in Japan is set to introduce new measures to protect users of cryptocurrency exchanges from potential hacks and unforeseen events. According to a recent report by Nikkei, the FSA will require crypto exchanges to establish liability reserves, enabling them to quickly compensate users affected by security breaches or other causes. This move comes in response to the recent hacker attacks on global stock exchanges, highlighting the need for enhanced security measures in the cryptocurrency sector.
Enhanced Regulatory Framework
The Financial System Council, an advisory body to the FSA, is expected to publish a report on the issue after a meeting, recommending that crypto firms establish liability reserve funds. This development is part of a broader effort to review and refine regulations governing the cryptocurrency industry in Japan. The FSA has also announced plans to assess regulations that would permit banks to buy and hold crypto assets, recognizing Japan’s significant concentration of crypto users, with approximately 12 million accounts registered in February.
Stablecoin Developments in Japan
In a related development, Tokyo-based fintech firm JPYC launched a yen-pegged stablecoin in October, backed one-to-one by bank deposits and government bonds. This launch follows the introduction of regulations recognizing the potential for stablecoins pegged to the Japanese yen. However, Japanese regulators had previously banned the issuance of stablecoins by non-banks in 2022. The FSA has since announced that it may approve the first yen-backed token by 2026, with several major financial institutions, including Mitsubishi UFJ Financial Group and Mizuho Bank, exploring their own stablecoin issuance platforms.
For more information on Japan’s FSA crypto exchange liability reserves, visit the original article.
