Japan Passes New Crypto Regulation : Here’s What’s New

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On June 6 , Japan’s parliament officially revised the Payment Services Act (PSA) , introducing a domestic asset holding order aimed at preventing crypto outflows and protecting Japanese investors from the risks of overseas crypto exchange collapses .

Why Did Japan Revise Its Payment Services Law?

The revision is a direct response to the rising bankruptcy risks among foreign crypto exchanges . When such platforms collapse, the crypto assets held by Japanese investors are often at risk of outflows or loss .

In 2024, a major crypto exchange in Japan was hacked, leading to a Bitcoin outflow worth over $305 million . The incident raised serious concerns about the security of customer funds and highlighted the need for stricter regulations .

Key Highlights of Japan’s Revised Crypto Law

• Stronger Investor Protection: The new law mandates that crypto exchanges operating in Japan must hold investor assets domestically , shielding them from foreign exchange bankruptcies.
  
• Flexible Business Model: A new intermediary framework will allow smoother collaboration between crypto exchanges and users , even for in-app crypto asset use in games.
  
• Trust-Type Stablecoins Update: Issuers can now manage up to 50% of their stablecoin issuance in low-risk assets , creating room for innovation while maintaining safety.
  
• Stringent Registration Requirements: All crypto-related entities must now register under the revised PSA , with strict AML and CFT compliance rules in place.
  

What’s Next?

The law passed both the Lower House in May and the Upper House on June 6 . It will be enforced within a year . Japan is also introducing a new category for businesses that facilitate interaction between exchanges and users , encouraging innovation in crypto asset services while tightening oversight.

Final Thoughts

Japan’s proactive move shows a clear intent: protect domestic investors from foreign exchange failures , while fostering a safe and scalable crypto ecosystem . The revised Payment Services Act marks a significant step in balancing security, regulation, and innovation in Japan’s crypto space.