Japan's regulator seeks public input on bonds eligible for stablecoin reserves

Japan's financial watchdog has launched a public consultation on draft rules for stablecoin reserve assets under its 2025 payments law overhaul.

In a statement released Monday, the Financial Services Agency disclosed a package of draft regulatory notices tied to the 2025 amendments to the Payment Services Act, including rules specifying which bonds may be used when managing reserve assets for regulated stablecoins issued through trust structures.

The draft notices form part of a broader package that seeks to formalize how "specified trust beneficiary interests" may be invested — a structure used by stablecoin issuers under the payments law — while also introducing updated administrative and supervisory guidance for crypto service intermediaries and financial institutions.

The consultation runs through Feb. 27, 2026, and implements Act No. 66 of 2025, enacted in June 2025, which revised Japan's framework for settlement and electronic payment instruments.

Reserve standards and intermediation rules

The proposed standards, set out in a draft FSA notice, limit eligible collateral to certain foreign-issued bonds that meet two strict criteria. 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 issuer must be at least 100 trillion yen (about $648 billion).

Concurrently, the FSA has issued new supervisory guidelines for banks, insurance companies, and their subsidiaries. A newly added clause states that when a subsidiary engages in cryptocurrency intermediation services, it must provide appropriate explanations to customers. This is to prevent clients from underestimating risk simply because the product is offered within a traditional financial group, according to the draft guidelines.

For businesses seeking to handle foreign-issued stablecoins, the drafts introduce a new check. Applicants must explain that the foreign issuer will not engage in issuance, redemption, or solicitation towards general users in Japan. The FSA noted it will coordinate with overseas regulators to share information on such instruments and their issuers.

The move comes as Japan steps up efforts to build out a regulated stablecoin ecosystem. In October, local fintech firm JPYC launched what it described as the country's first legally recognized yen-backed stablecoin.

Japan's three megabanks — MUFG, SMBC and Mizuho — have also rolled out stablecoin and tokenized deposit pilots spanning payments, interbank settlement and institutional financial services, a project that received formal backing from the FSA in December.