The Cabinet of Japan has green lit a proposal to amend the Payment Services Act, which would ease regulations for stablecoins and crypto brokerages.
According to a press release issued by the country’s Financial Services Agency, the bill has already been approved by the Cabinet and was submitted to the National Diet on the same day. The bill was previously approved by the FSA and could potentially make it easier for crypto firms to enter the Japanese market.
For a bill to pass through the National Cabinet, it must receive a majority vote from the Cabinet members present at the meeting. The Cabinet is led by the Japanese Prime Minister, who plays a key role in determining consensus, as the Cabinet operates under the principle of collective responsibility. Once approved, the bill is formally submitted to the National Diet for legislative debate and voting.
Once it passes through to the Diet, the bill is assigned to a relevant committee where it is examined, debated, and potentially amended before it is introduced to the full chamber. If both the House of Representatives and the House of Councillors approve the bill, it is then sent to the Emperor for ceremonial promulgation, which will formalize the law and eventually enact it.
What are the potential changes to Japan’s crypto regulations?
The bill would allow for stablecoins to be backed by short-term government bonds and fixed-term deposits, aside from only the demand deposits. This clause also comes equipped with an upper limit of 50% for government bonds and deposits that can be used as collateral for stablecoins.
At press time, stablecoin issuers in Japan are required to match the amount of circulated tokens on a 1:1 ratio with cash deposits in regulated bank accounts. The new rule grants them more flexibility to be able to use other assets like Japanese and U.S. government bonds instead. However, only certain types of bonds can be used, including those with a remaining maturity of three months or less.
In addition, the bill will also create a new category just for “intermediary” crypto businesses or brokerages. In Japan, crypto brokerage firms can only operate within the country if they manage to fulfill the same registration requirements as crypto exchange platforms.
This means that crypto brokerages need to apply for a virtual asset service provider license, just like domestic crypto exchanges. Under the new bill, intermediaries will abide to their own set of requirements and anti-money laundering obligations, instead of being clumped together with exchanges that operate differently.
