The Japanese Financial Services Agency (FSA) has initiated a public consultation period regarding the specific types of debt instruments that will be permitted as backing assets for regulated stablecoins. This process is a crucial step toward the full implementation of the revised Payment Services Act (PSA), which took effect in June 2023. The PSA legalized stablecoins in Japan but mandates that they must be 100% backed by segregated, high-quality, and liquid assets to ensure consumer protection and stability.
The consultation seeks input on the exact criteria for eligible bonds. While it is widely anticipated that Japanese government bonds (JGBs) will be approved, the FSA is scrutinizing criteria for other potential reserve assets, including highly rated foreign sovereign bonds and certain corporate bonds. The primary regulatory objective is to establish definitive standards that prevent systemic risk and ensure that yen-pegged stablecoins can maintain their par value even under stress. The feedback gathered during this period will inform the final regulatory ordinances, paving the way for licensed banks and trust companies to proceed with the full-scale issuance of domestic regulated stablecoins.
Source: Japan’s regulator seeks public input on bonds eligible for stablecoin reserves
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