TechFlow reports, according to CoinDesk Japan, that Japan's Financial Services Agency approved on February 19 the working group report from the Financial System Council regarding the funds settlement system. After seven rounds of discussions, the report proposes a new regulatory framework for crypto asset exchanges and stablecoins.
The report recommends incorporating relevant provisions from the Financial Instruments and Exchange Act into the Funds Settlement Act to strengthen user protection in the event of exchange bankruptcies. It also proposes introducing an "affiliation system" for crypto asset trading, requiring intermediaries to be affiliated with specific exchanges and prohibiting them from holding users' assets.
Regarding stablecoin regulation, the report allows issuers to allocate up to 50% of reserves into short-term government bonds and designated time deposits, no longer limiting holdings solely to demand deposits. The regulatory framework has been submitted for approval to Kato Katsunobu, head of the Financial Services Agency, and related legislative work is set to begin shortly.
