Japan’s FSA Proposes Tight Rules for Stablecoin Reserves Ahead of 2025 Payments Reform

Japan’s financial regulator has put forward a focused regulatory package aimed at shaping how regulated stablecoins are backed and intermediated under the country’s upcoming payments law changes. The draft notices narrow acceptable reserve assets to a small subset of foreign bonds by demanding top-tier credit quality and very large issuance volumes from the bond’s issuer, and they accompany fresh supervisory guidance for banks, insurers and group subsidiaries that handle crypto services. Regulators also want applicants who plan to work with foreign-issued stablecoins to demonstrate that the overseas issuer will not perform issuance, redemption or marketing directed at Japanese retail users, and the FSA said it will coordinate information-sharing with overseas counterparts. The consultation window runs through late February 2026 and implements provisions from Act No. 66 of 2025. Practically, the measures are designed to marry legal clarity with prudential caution: by restricting eligible collateral to highly rated, widely issued bonds, supervisors aim to reduce counterparty and liquidity risk in reserve portfolios while keeping stablecoin issuance within verifiable structures. At the same time, requiring subsidiaries to give explicit risk explanations addresses the concern that a product’s placement within a traditional financial group can falsely reassure customers. The proposals also reflect a trade-off: tighter collateral rules limit asset choices for issuers, which could raise operational complexity or push some activity offshore, yet those limits may increase institutional acceptance by banks and insurers. Japan’s recent domestic and pilot activity — including private-sector yen stablecoins and bank-led tokenization trials — frames regulatory urgency and a desire to anchor market development to high standards. If adopted, the rules will shape which issuers and assets can support regulated stablecoins in trust-based arrangements and influence which financial groups participate. The FSA’s emphasis on foreign cooperation signals that cross-border regulatory alignment will be an important part of the regime’s practical enforcement. For market participants, the immediate task will be aligning issuance structures, reserve custody arrangements and disclosures to meet the new thresholds and supervisory expectations. The policy balances fostering a domestic regulated stablecoin ecosystem with strict safeguards that may raise barriers to entry for smaller or less-established issuers, and it sets a clear signal: only large, highly rated bond issuers will form the backbone of reserve strategies for the regulated stablecoins envisioned under the 2025 reforms.