TL;DR
- Japan’s FSA proposes strict rules requiring stablecoins to be backed by high-quality bonds like government debt.
- A public comment period on the draft regulations is open until February 27, 2026.
- Major Japanese banks like MUFG and SBI are actively developing and testing regulated stablecoins.
The Japan Financial Services Agency (FSA) opened a public comment period for new rules that define which bonds can be used to back stablecoins. The proposal includes updated guidelines for banks, insurance companies, and crypto asset brokers to ensure they manage digital assets safely.
Japan currently attempts to fully implement the Reiwa 7 (2025) amendments to the Fund Settlement Act. The FSA accepts public comments on a new rule for bonds that can be used to back stablecoins.
The Financial Services Agency’s public comment period will last until February 27, 2026, after which all opinions will be reviewed and results will be published alongside previous findings from late 2025.
The Japan FSA officially opened a public comment period lasting until February 27 regarding the types of bonds that can serve as “supporting assets” for stablecoins.
The government wants to ensure that stablecoins are truly stable as part of the implementation of the “Act to Amend Part of the Act on Fund Settlement,” which was updated in 2025 (Reiwa 7).
The new draft notice specifically targets and clarifies a legal structure used to protect stablecoin holders known as “specified trust beneficiary rights.” By designating exactly which bonds are allowed, the FSA aims to ensure that if a stablecoin issuer faces a sudden demand for withdrawals, consumers can sell their bond holdings quickly without them losing value.
FSA Focus on Quality and Liquidity of Reserve Assets
The FSA’s new draft focuses on the quality and liquidity of assets held in reserve. Its full list includes high-grade securities, but the primary focus is on Japanese Government Bonds (JGBs) and other highly rated debt instruments.
Restricting reserves to high-quality bonds creates a “walled garden” for stablecoins in Japan and makes them more like traditional bank deposits than volatile crypto assets.
The public comment period allows industry experts and citizens to weigh in on whether bond requirements are too strict or appropriate for the current market. Participants must provide their names and reasons for their opinions.
The FSA has stated it will not respond to comments individually, and results will be published alongside its previous findings from late 2025. Once feedback is reviewed, the new rules will be officially announced and enforced.
Aside from stablecoin legislation, the update also introduces new “Office Guidelines” and “Supervision Guidelines” for a wide range of financial institutions, including banks, insurance companies, and crypto asset service brokers.
As more traditional Japanese firms enter the digital asset space, the FSA is tightening its oversight. For instance, SBI Holdings has been working closely with Circle, the issuer of the USDC stablecoin, to bring regulated dollar-backed tokens to the Japanese market.
Similarly, Mitsubishi UFJ Financial Group (MUFG) has developed its “Progmat” platform, which is designed to issue various stablecoins and tokenized assets. MUFG, along with Mizuho Bank and Sumitomo Mitsui Banking Corp (SMBC), recently received approval for a “proof-of-concept” to test stablecoins for cross-border payments between corporate offices.
The “Supervision Guidelines” specifically address how banks and insurance companies must handle their subsidiaries that deal with crypto assets.
The FSA wants to ensure that risks of the crypto market do not affect the traditional banking system. For brokers, the new “Office Guidelines” set strict rules for “electronic payment methods,” the legal term Japan uses for stablecoins.
The regulation reflects a cautious approach toward integrating digital assets into the Japanese financial system. Authorities balance the need to allow crypto products while protecting consumers and maintaining financial stability.
Japanese government bonds provide immediate liquidity and stable value, essential characteristics for backing stablecoins that promise one-to-one parity with fiat currencies. The restriction to high-quality instruments reduces the risk that stablecoin issuers hold assets that could lose value during market crises.
