Key Takeaways
- •Japan plans to mandate liability reserve funds so exchanges can reimburse users immediately after hacks or failures.
- •The new safety rules are being developed alongside a surge in regulated yen-backed stablecoin initiatives.
- •Japan is positioning itself as a market that welcomes crypto growth while enforcing strict consumer protection.
The country’s top financial authority is working on rules that would force exchanges to build a financial buffer specifically dedicated to reimbursing customers during emergencies. The idea reflects a growing belief among regulators that crypto platforms should not be allowed to scramble for money after an incident — they must already have it when the crisis hits.
A Shift From Reactive Regulation to Preventive Regulation
For years, global investigations into exchange hacks have shared a common theme: compensation tends to come slowly, if at all. Japan wants to reverse that pattern. Instead of waiting for funds to be recovered or for insurers to negotiate, the new rule would require companies to pre-fund a liability reserve, guaranteeing immediate payouts.
The Financial System Council, which advises the Financial Services Agency (FSA), is finalizing a report that will shape how these reserves must be structured. The advisory board meets Wednesday, and its recommendations are expected to anchor the next stage of Japan’s crypto reform cycle.
The timing is not random. Japan has one of the largest pools of crypto users on earth — more than 12 million registered accounts — so even isolated failures could affect a significant share of the population.
While Safety Rules Tighten, the Stablecoin Race Heats Up
Ironically, the push for tougher safeguards comes at the same time Japan is opening the door to a completely new generation of digital assets.
A Tokyo-based fintech, JPYC, recently rolled out a yen-pegged stablecoin backed by deposits and Japanese government bonds — the type of conservative reserve model regulators want to encourage. The launch marked a milestone: Japan had already created the regulatory path for yen stablecoins, but until now it was mostly theoretical.
The sector could get far more competitive. Mitsubishi UFJ, Sumitomo Mitsui and Mizuho — the three banks that dominate Japan’s financial system — are exploring stablecoin strategies through their Progmat platform. Monex Group is studying its own token as well.
The FSA signaled in August that approval for additional yen-backed stablecoins may come as early as 2026 — a dramatic pivot from 2022, when non-banks were essentially blocked from issuing any stablecoin at all.
Japan’s Identity in the Global Crypto Economy Is Becoming Clear
Japan is not trying to become a wild west of crypto, nor is it chasing the role of a fully restrictive jurisdiction. Instead, it appears to be embracing a middle path: encourage innovation, but make safety non-negotiable.
If crypto companies want to serve Japanese customers, they will soon have to prove — not promise — that customer money will be reimbursed even in the worst-case scenario.
And if they want to issue yen-pegged stablecoins, they will need to match the transparency and reliability expected of Japan’s traditional banking sector.
Japan is not scaling back crypto — it is forcing it to grow up.