Japan's Financial Services Agency (FSA) on Nov. 11 published the minutes of the inaugural meeting, held Oct. 20, of its Study Group on the Modalities of Digital and Decentralized Finance. On building out the environment for on-chain finance — the exchange of assets on blockchain — members repeatedly voiced the view that the FSA should issue a "strong message" that would contribute to the sound development of not only finance but a broad range of industries, along with the argument that Japan should respond nimbly so it does not become a venue for regulatory gaps or regulatory arbitrage.
The study group was established as a forum to review the regulatory framework for asset tokenization, stablecoins, decentralized exchanges (DEXs) and decentralized finance (DeFi). The move follows the government's pledge in its July "Honebuto" economic and fiscal policy guidelines for 2026 to promote such efforts, and the FSA's explicit inclusion of social implementation in its September financial administration policy. At the first meeting, Nomura Holdings and Securitize Japan, the Japanese unit of U.S.-based Securitize, gave testimony, presenting views including a call to bring DeFi and wallet regulations in line with standards overseas.
According to the minutes, members also had requests regarding how the discussions should proceed. Noting that a large part of the benefits and risks can only be grasped through proof-of-concept experiments, some called for fleshing out the institutional design based on experimental results. Others said the framework should be put in place on a priority basis in areas where it is hampering actual business operations.
On stablecoins, a view was presented that interest is declining overseas. Instead, attention is focusing on "tokenized deposits," which handle bank deposits on blockchain, according to the discussion. A point was also raised that if large-scale redemption requests concentrate on a major issuer, there is a risk that the government bonds backing the tokens could be sold off in large volumes, so it should be confirmed whether regulation is sufficient.
The study group held its second meeting on Nov. 2, at which it became clear that JPYC and the Japanese Bankers Association held divergent views on caps on stablecoin holdings.
With the FSA now fully embarking on building the regulatory framework for on-chain finance, businesses involved in crypto assets and stablecoins have entered a phase in which the direction of Japanese regulations will shape their business plans. While calls are growing for a degree of freedom on par with overseas markets, how to curb risks to the financial system as a whole — including the impact on the government bond market — will be the focus going forward. The study group's discussions are likely to form the foundation of Japanese rules on the positioning of tokenized deposits and DeFi.
