Japan’s Crypto Overhaul: New Rules to Prevent the Next Hack (Yes, Another One!)

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In an absolutely shocking turn of events (not really), Japan’s Financial Services Agency (FSA) has decided that maybe, just maybe, they should tighten things up in the world of digital assets. Because, you know, people keep losing slightly large amounts of money. So, what’s the solution? New registration rules for crypto custodians and service providers, naturally. Brilliant!

Japan’s FSA Proposes New Framework

Hold onto your digital wallets, folks! The FSA is putting forward a dazzlingly new regulatory framework that requires digital asset custodians to actually register before providing any services to cryptocurrency exchanges. Because, apparently, letting them operate without any oversight was the most innovative idea ever. The proposal is part of an urgent bid to stop hacks, especially after the catastrophic DMM Bitcoin breach. The plan is simple: only allow exchanges to use systems developed by those lucky enough to have registered. Problem solved! (We hope.)

Now, Japan’s current rules were already on the stricter side-exchanges had to keep client assets in cold wallets, which, let’s face it, is pretty cold. But the external service providers? Meh, they’ve had a far easier ride. Regulators started to think this might have caused a teensy-weensy security gap. Who could’ve predicted this would end in disaster? Enter the DMM Bitcoin hack of 2024, where 48.2 billion yen (that’s about $312 million, but who’s counting?) in BTC was stolen. Authorities traced it back to Ginco, a Tokyo-based software firm, proving once again that outsourcing can be a real pain in the digital wallet.

Broad Support

Not surprisingly, the FSA’s working group is mostly in favor of these new registration rules. After all, who wouldn’t want clearer regulations for a rapidly growing crypto market? The FSA plans to submit these amendments to the Financial Instruments and Exchange Act during Japan’s 2026 ordinary Diet session-if you’re keeping track, that’s about a thousand years in crypto time. Meanwhile, the FSA has also been busy launching Japan’s first yen-backed stablecoin (because stablecoins haven’t had enough time in the spotlight). They’re also partnering up with Japan’s top three banks for a stablecoin pilot. Exciting times ahead!

In other words, while the FSA fiddles with regulations, they’re also going full speed ahead with innovation. Because balancing innovation and investor protection is exactly as easy as it sounds.

The Payment Innovation Project (PIP)

Meanwhile, Japan’s top financial groups-Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho-are kicking off a stablecoin pilot as part of the FSA’s new Payment Innovation Project (PIP). It’s a joint venture that aims to streamline payments and increase corporate productivity. They’re working on a shared framework for yen-backed stablecoin issuance, which will make transfers smoother and possibly make crypto transactions less of a nightmare. There might even be a dollar-pegged stablecoin coming to challenge the already-ubiquitous USDT and USDC. Because why not? The more, the merrier!

The project also has a few extra partners-Mitsubishi Corporation (because of course), Progmat (for the tech infrastructure), and Mitsubishi UFJ Trust and Banking Corporation (handling trust functions, because trust is still a thing). Testing is expected to begin in 2025. Assuming, of course, that no one forgets their passwords this time.

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2025-11-13 19:36