Japanese watchdog to require exchanges to hold liability reserves: Report
Analysis
Price Impact
MedThe requirement for japanese exchanges to hold liability reserves enhances user protection against hacks and unforeseen events. while this adds compliance costs for exchanges, it builds trust and security for users, potentially attracting more capital into the crypto market in the long run. short-term impact might be muted, but it's a foundational step for market maturity.
Trustworthiness
HighThe report cites nikkei and the financial services agency (fsa) in japan, reputable sources for financial news and regulatory information. cointelegraph is also a well-regarded crypto news source.
Price Direction
NeutralInitially, the market might react neutrally as this is a regulatory cost for exchanges, not a direct price driver. however, the long-term sentiment is bullish as increased safety and regulatory clarity tend to attract more institutional and retail participants, boosting overall market confidence and potentially leading to higher valuations over time.
Time Effect
LongRegulatory changes and their full impact on market structure, adoption rates, and investor sentiment typically unfold over an extended period. it will take time for exchanges to fully implement these reserves and for the market to fully absorb the implications of enhanced user protection.
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Turner Wright 5 minutes ago Japanese watchdog to require exchanges to hold liability reserves: Report An advisory body to Japan's FSA will reportedly release a report recommending crypto companies hold reserves to compensate users for events such as hacks. Listen 0:00 38 News COINTELEGRAPH IN YOUR SOCIAL FEED The Financial Services Agency in Japan will reportedly require cryptocurrency exchanges to maintain liability reserves as part of measures to guard against hacks or unforeseen events. According to a Monday Nikkei report, Japan’s FSA will revise its requirements for local companies to include methods for quickly compensating users affected by security breaches or other causes. The financial watchdog reportedly cited recent hacks of global exchanges as part of the reason behind the change. The Financial System Council, an advisory body to the FSA, is reportedly set to release a report on the matter following a meeting on Wednesday. One of the expected recommendations would require crypto firms to create liability reserve funds. The move follows reports that the FSA plans to review regulations that would allow banks to purchase and hold crypto assets. Japan remains a country with a high concentration of crypto users, with about 12 million accounts registered as of February, according to data from the FSA. The country has a population of about 123 million. Related: SoftBank’s PayPay changes the game for Binance Japan users Yen-pegged stablecoin launched Long after establishing regulations recognizing a potential stablecoin pegged to the Japanese yen, the Tokyo-based fintech firm JPYC launched the digital asset in October. According to the company, the JPYC stablecoin is backed one-to-one by bank deposits and government bonds. In 2022, Japanese regulators prohibited the issuance of stablecoins by non-banking institutions. However, the FSA signaled in August that it could approve the first yen-backed token by 2026. Some of the country’s largest financial institutions, including Mitsubishi UFJ Financial Group, Bank Sumitomo Mitsui Banking Corp and Mizuho Bank, launched their stablecoin issuance platform Progmat in 2023, and are reportedly exploring their own token. Monex Group, another Japan-based financial company, is also considering the launch of a yen-pegged stablecoin. Magazine: Bitcoin whale Metaplanet ‘underwater’ but eyeing more BTC: Asia Express # Cryptocurrencies # Japan # Cryptocurrency Exchange # Regulation # Bitcoin Reserve Add reaction