Japan's Financial Services Agency (FSA) has initiated a public consultation on draft regulatory notices that will define the strict criteria for bonds eligible to back stablecoin reserves under the country's revised Payment Services Act. The consultation, which runs through February 27, 2026, seeks to formalize rules for "specified trust beneficiary interests," the structure used by regulated stablecoin issuers.
The proposed standards limit eligible collateral to foreign-issued bonds meeting two stringent conditions. First, the bonds must carry a high credit rating, corresponding to a credit risk category of "1–2" or above from a designated rating agency. Second, the total outstanding amount of bonds issued by the foreign entity must be at least 100 trillion yen (approximately $648 billion). This framework is part of implementing Act No. 66 of 2025, enacted in June 2025, which overhauled Japan's settlement and electronic payment laws.
Concurrently, the FSA has issued updated supervisory guidelines for traditional financial institutions like banks and insurance companies. A newly added clause mandates that when a subsidiary offers cryptocurrency intermediation services, it must provide appropriate risk explanations to customers. This aims to prevent clients from underestimating risk simply because the product is offered within a trusted financial group.
For businesses seeking to handle foreign-issued stablecoins, the drafts introduce a new compliance check. Applicants must demonstrate that the foreign issuer will not engage in issuance, redemption, or solicitation targeting general users in Japan. The FSA noted it will coordinate with overseas regulators to share information on such instruments and their issuers.
This regulatory push is part of Japan's broader effort to build a regulated stablecoin ecosystem. In October, fintech firm JPYC launched what it described as the country's first legally recognized yen-backed stablecoin. Furthermore, Japan's three megabanks — Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Financial Group (SMBC), and Mizuho Financial Group — have rolled out stablecoin and tokenized deposit pilots for payments, interbank settlement, and institutional financial services, a project that received formal FSA backing in December 2025.
