Japan is moving toward stricter oversight of the digital asset sector. According to reporting by Nikkei, the Financial Services Agency (FSA) plans to require cryptocurrency exchanges to maintain special reserves designed to compensate users in the event of hacks or other extraordinary incidents. The move responds to a series of global exchange breaches and reflects Japan’s broader effort to strengthen investor protection in one of the world’s most active crypto markets.

New reserve funds aim to safeguard users

The Financial System Council, an advisory body to the FSA, is expected to formally recommend the change in a report following Wednesday’s meeting. Under the proposal, exchanges and crypto service providers would be required to establish so-called liability reserve funds — a dedicated cushion that enables swift compensation for affected users after security incidents.

The regulator also intends to streamline procedures to ensure quick payouts and avoid drawn-out disputes. Japan is increasingly prioritizing user protection over market expansion, in line with its long-standing policy of rigorous oversight of crypto activity.

Japan is a global crypto hub with 12 million accounts

The FSA highlights the growing importance of cryptocurrencies in the country's economy. As of February, Japan had roughly 12 million registered crypto accounts, representing around ten percent of the population. The market is considered technologically mature and consistently attractive to global players.

Among the planned revisions is the possibility of allowing banks to purchase and hold cryptocurrencies in the future — a change that would bring digital assets even closer to mainstream finance.

Stablecoins gain momentum as Japan launches yen-pegged tokens

The tightening of regulations comes amid rapid expansion of Japan’s stablecoin market. Tokyo-based fintech firm JPYC recently launched the JPYC token, pegged 1:1 to the Japanese yen and backed by bank deposits and government bonds — a model regulators consider ideal.

Until two years ago, Japanese law prohibited issuing stablecoins outside the banking sector. Only this year has the FSA suggested that the first officially approved yen-backed token may arrive in 2026.

Major financial institutions are also entering the space. Mitsubishi UFJ Financial Group, Sumitomo Mitsui Banking Corporation, and Mizuho Bank launched the Progmat platform to support secure token issuance. According to available reports, they are working on their own stable tokens, which could eventually complement the traditional financial system.

Sources:

https://asia.nikkei.com/spotlight/cryptocurrencies/japan-to-require-crypto-exchanges-to-set-aside-liability-reserves

https://www.fsa.go.jp/news/r7/singi/20251119.html

https://news.livedoor.com/article/detail/29807537/?utm_source=chatgpt.com

https://corporate.jpyc.co.jp/news/posts/jpyc-ex-launch

https://www.nikkei.com/nkd/company/us/C/news/?DisplayType=1&ng=DGXZQOUB146U8014082025000000