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The Financial Services Agency in Japan will reportedly require cryptocurrency exchanges to maintain liability reserves as part of measures to guard against hacks or unforeseen events.
According to a Monday Nikkei report, Japan’s FSA will <a href="https://asia.nikkei.com/spotlight/cryptocurrencies/japan-to-require-crypto-exchanges-to-set-aside-liability-reserves" rel="noopener noreferrer nofollow" target="_blank">revise</a> its requirements for local companies to include methods for quickly compensating users harmed by security breaches or other causes. The financial watchdog cited recent hacks of global exchanges as part of the reason behind the change.<iframe width="100%" height="315" src="https://www.youtube.com/embed/5aNlhB6O3V8?start=" frameborder="0" allow="accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture" allowfullscreen loading="lazy" sandbox="allow-scripts allow-same-origin allow-popups allow-forms"></iframe>
The Financial System Council, an advisory body to the FSA, is set to release a report on the matter following a <a href="https://www.fsa.go.jp/news/r7/singi/20251119.html" rel="noopener noreferrer nofollow" target="_blank">meeting</a> on Wednesday. One of the expected recommendations would require crypto firms to create liability reserve funds.
The move follows reports that the FSA <a href="https://cointelegraph.com/news/japan-fsa-may-let-banks-hold-bitcoin-crypto-assets" rel="noopener noreferrer nofollow" target="_self">plans to review regulations</a> that would allow banks to purchase and hold crypto assets. Japan remains a country with a high concentration of crypto users, with about 12 million accounts registered as of February, according to data from the FSA. The country has a population of about 123 million.
Related: <a href="https://cointelegraph.com/news/softbank-paypay-binance-payments-japan-investment" rel="noopener noreferrer nofollow">SoftBank’s PayPay changes the game for Binance Japan users</a>
<h2 id="yen-pegged-stablecoin-launched">Yen-pegged stablecoin launched</h2>
Long after establishing regulations recognizing a potential stablecoin pegged to the Japanese yen, the Tokyo-based fintech firm JPYC <a href="https://cointelegraph.com/news/yen-backed-stablecoin-launches-in-japan" rel="noopener noreferrer nofollow" target="_blank">launched the digital asset</a> in October. According to the company, the JPYC stablecoin is backed one-to-one by bank deposits and government bonds.
In 2022, Japanese regulators <a href="https://cointelegraph.com/news/japan-passes-bill-to-limit-stablecoin-issuance-to-banks-and-trust-companies" rel="noopener noreferrer nofollow" target="_blank">prohibited the issuance of stablecoins</a> by non-banking institutions. However, the FSA <a href="https://cointelegraph.com/news/japan-approves-first-yen-stablecoin-jpyc" rel="noopener noreferrer nofollow" target="_blank">signaled in August</a> that it could approve the first yen-backed token by 2026.
Some of the country’s largest financial institutions, including Mitsubishi UFJ Financial Group, Bank Sumitomo Mitsui Banking Corp and Mizuho Bank, launched their stablecoin issuance platform Progmat in 2023, and <a href="https://cointelegraph.com/news/japan-mega-banks-stablecoin-mitsubishi-progmat?utm_source=chatgpt.com" rel="noopener noreferrer nofollow" target="_blank">are reportedly exploring</a> their own token.
Monex Group, another Japan-based financial company, is also considering the launch of a yen-pegged stablecoin.
Magazine: <a href="https://cointelegraph.com/magazine/bitcoin-holder-metaplanet-btc-buys-south-korea-stablecoin-asia-express/" rel="noopener noreferrer nofollow">Bitcoin whale Metaplanet ‘underwater’ but eyeing more BTC: Asia Express</a>

Japanese watchdog to require exchanges to hold liability reserves: Report

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