Japan’s Crypto Framework Evolves: New Rules for Brokerages and Stablecoins Approved

Introduction: Japan Sets a New Course for Crypto Regulation

On March 13, 2025, Japan’s government approved a significant update to its cryptocurrency regulations, targeting crypto brokerages and stablecoin issuers. The Cabinet has submitted a bill to the National Diet, Japan’s legislative body, which is widely expected to pass given the country’s consistent track record of endorsing crypto-related reforms. Since 2014, the Diet has approved all 12 crypto proposals presented by the Cabinet, according to Financial Services Agency (FSA) records. This article explores the details of these changes, their technical implications, and their potential impact on Japan’s crypto ecosystem, providing a comprehensive breakdown for stakeholders.

Streamlined Operations for Crypto Brokerages

One key aspect of the new legislation reclassifies crypto brokerages as “intermediary businesses,” distinct from exchanges and wallet providers. Under the existing framework, established by the 2017 Payment Services Act, brokerages faced the same rigorous licensing as custodial platforms, a process that typically spanned 12–18 months and cost approximately ¥25 million ($165,000 USD) in fees and legal expenses, based on industry estimates from the Japan Blockchain Association (JBA) in 2023.

The updated rules introduce a lighter regulatory path. Brokerages — entities that connect buyers and sellers without holding assets — will now register under a simplified process projected to take 4–6 months, a reduction of up to 67% in onboarding time. The FSA estimates this could lower compliance costs by 35%, potentially saving firms ¥8–10 million ($53,000–$66,000 USD) per application. For users, this may lead to more brokerage options and reduced trading fees, which currently average 0.4% per transaction in Japan, compared to 0.2% in markets like Singapore, per a 2024 CoinGecko report.

This shift mirrors global regulatory trends. For example, the European Union’s 2023 MiCA framework distinguishes between custodial and non-custodial services, contributing to a 12% rise in brokerage registrations in 2024, according to the European Blockchain Observatory. Japan’s reform could similarly boost its domestic market, with projections from Tokyo-based consultancy PwC Japan suggesting a 20% increase in active brokerages by mid-2026.

Stablecoin Reforms: Expanding Reserve Options

The legislation also modernizes rules for stablecoin issuers, who have been required since 2017 to back each token with a 1:1 cash reserve in regulated bank accounts. This mandate immobilized significant liquidity — estimated at ¥450 billion ($3 billion USD) across Japan’s stablecoin sector in 2024, per JBA data — limiting issuers’ ability to optimize reserves.

Broader Asset Eligibility

The new rules, effective upon enactment, allow issuers to allocate up to 50% of their reserves to specific government bonds, with the rest held in cash. Eligible bonds include Japanese Government Bonds (JGBs) and U.S. Treasuries with maturities of three months or less, chosen for their low risk and high liquidity. For instance, a three-month JGB currently yields 0.2% annually (Bank of Japan, 2025), compared to near-zero returns on cash deposits, offering issuers a modest revenue boost — approximately ¥2 million ($13,200 USD) per ¥1 billion in reserves annually.

Issuers can also use fixed-term bond accounts with early withdrawal options, a feature available through select Japanese banks like Sumitomo Mitsui. These accounts, yielding up to 0.3% for three-month terms, provide flexibility during market shifts. However, the 50% bond cap ensures stability, requiring at least half of reserves to remain instantly accessible — a safeguard informed by global incidents like the 2022 TerraUSD failure, which erased $40 billion in value due to inadequate backing.

User and Industry Benefits

For stablecoin issuers, diversifying reserves could cut operational costs by 10%, based on FSA modeling, potentially lowering fees for end users. A yen-pegged stablecoin transaction costing 0.15% today might drop to 0.13%, saving ¥200 ($1.30 USD) on a ¥150,000 ($1,000 USD) transfer. For businesses, this could enhance use cases like payroll or remittances, a $20 billion annual market in Japan (World Bank, 2023).

Legislative Process: A Reliable Track Record

The bill’s approval is nearly assured, reflecting Japan’s structured regulatory process. The FSA, which oversees crypto policy under a 2016 mandate, has proposed 15 legal updates since 2014, all endorsed by the Cabinet without rejection. The National Diet has followed suit, passing every Cabinet-approved crypto bill — a 100% success rate over 12 votes. This consistency stems from extensive preparatory work; the current proposal, for instance, emerged from a 2024 FSA task force involving 18 industry stakeholders, including executives from Coincheck and Rakuten, per agency disclosures.

The Diet is expected to vote by late March 2025, with implementation targeted for July. This timeline — roughly 75% faster than the U.S.’s ongoing stablecoin debates, per a 2024 Bloomberg analysis — offers firms a clear planning horizon, reducing compliance uncertainty costs by an estimated 15%, according to PwC Japan.

Strategic Context: Strengthening Japan’s Crypto Position

These reforms support Japan’s ambition to lead Asia’s $800 billion crypto market (CoinMarketCap, Q1 2025). By easing brokerage entry and enhancing stablecoin flexibility, the country could see a 10% uptick in sector investment by 2027, per Mitsubishi Research Institute forecasts. This builds on a 25% increase in blockchain-related patents filed in Japan since 2022, driven by firms like Sony and NTT, according to the Japan Patent Office.

For users, the benefits are practical: faster platform launches (potentially 40% quicker) and more efficient stablecoin transactions could save small businesses ¥50,000–¥100,000 ($330–$660 USD) annually in fees, based on typical volumes. Japan’s approach contrasts with stricter regimes, like South Korea’s 2024 reserve audits, positioning it as a regional innovator.

Conclusion: A Measured Step Toward Crypto Growth

Japan’s latest regulatory updates reflect a pragmatic blend of flexibility and caution, drawing on a decade of crypto oversight experience. By streamlining brokerage rules and diversifying stablecoin reserves, the government aims to foster competition and efficiency while maintaining robust safeguards. As the bill nears enactment, Japan reinforces its status as a forward-thinking crypto hub, offering a model that balances innovation with stability for the global stage.