As digital finance accelerates across the globe, Japan is taking a proactive step toward modernizing its regulatory framework. In a recent policy shift, the country’s Financial Services Agency (FSA) has unveiled plans to introduce a crypto asset brokerage license—a move designed to open the door for non-traditional financial players while maintaining strong investor safeguards.
This reform aims to create a more flexible, innovation-friendly environment for businesses like gaming companies, telecom providers, and fintech startups that want to integrate blockchain-based services—without the heavy compliance burden of a full Virtual Asset Service Provider (VASP) license.
👉 Discover how Japan’s new crypto regulations could reshape digital finance for businesses and users.
A Strategic Overhaul of Japan’s Digital Finance Regulations
At the Financial Affairs Committee meeting on February 12, Shiyuki Abeta, Director-General of the FSA’s Planning and Market Bureau, presented a comprehensive regulatory reform plan focused on crypto assets and stablecoins. The proposal builds on discussions from the Financial System Council's working group and reflects Japan’s commitment to balancing user protection, market integrity, and technological innovation.
The reforms come in response to evolving market dynamics and global incidents such as the FTX collapse, which underscored the need for stricter asset custody rules—and more nuanced licensing structures.
Strengthening Investor Protection: Domestic Custody Mandate
One of the most significant changes is the proposed domestic custody requirement for crypto exchange operators. Under this rule, exchanges must store user assets within Japan, reducing exposure to offshore risks and enhancing transparency.
This mandate directly addresses concerns raised by the 2022 FTX bankruptcy, where customer funds were commingled and held in jurisdictions with weak oversight. By localizing asset storage, Japan aims to restore trust in digital asset platforms and ensure faster resolution in case of insolvency.
Creating a New Class of Regulated Entities: The Crypto Brokerage License
Currently, any entity facilitating crypto transactions—even indirectly—must obtain a full VASP license. This includes stringent capital requirements, cybersecurity protocols, and ongoing reporting obligations. For many non-financial firms, especially those integrating crypto into existing apps or services, this barrier is too high.
To address this, the FSA is proposing a dedicated crypto brokerage license tailored for intermediaries that do not hold customer funds.
This new category recognizes that not all crypto-related services carry the same level of risk. A company enabling in-game NFT trades or peer-to-peer token swaps via a non-custodial wallet, for example, should not face the same regulatory scrutiny as a centralized exchange handling billions in deposits.
👉 See how lightweight licensing models can unlock Web3 innovation in mainstream applications.
What Is the Proposed Crypto Brokerage License?
Why Is Japan Introducing a New Licensing Tier?
The push for a separate brokerage framework stems from growing demand—particularly from gaming, e-commerce, and telecom sectors—to embed crypto functionality into consumer apps. These companies often act only as facilitators, connecting users to licensed VASPs without touching private keys or funds.
Under current rules, however, such activity may still be classified as virtual asset trading, triggering full VASP registration. This mismatch between business model and regulation has stifled innovation.
The FSA now emphasizes that regulatory treatment should depend on the nature of the service, not just the platform it runs on. If an app merely introduces buyers and sellers—or routes transactions through a compliant exchange—it should be subject to proportionate oversight.
Hence, the new brokerage license is being designed specifically for these low-risk intermediary roles.
How Does the Brokerage License Differ from a Full VASP License?
| Feature | VASP License | Proposed Brokerage License |
|---|---|---|
| User Asset Custody | Allowed | ❌ Not permitted |
| Core Function | Trading, custody, conversion | Transaction facilitation only |
| Regulatory Oversight | Direct FSA supervision | Supervised via affiliated VASP |
| Capital Requirements | High (JPY 100 million+) | Significantly lower |
| Liability Framework | Direct responsibility | Backed by partner exchange |
| Advertising Rules | Strict compliance needed | Transparent disclosure required |
By excluding custody rights and tying brokers to registered VASPs, the FSA ensures that user protection remains intact while lowering entry barriers.
This model also encourages collaboration between traditional tech firms and established crypto platforms—paving the way for seamless integration of digital payments, NFT marketplaces, and tokenized loyalty programs in everyday apps.
Affiliation Model: Linking Brokers with Registered Exchanges
According to a November 2023 report by the Financial System Council’s Payment Systems Working Group, crypto brokers will operate under a "sponsored" or "affiliated" model. This means each brokerage must partner with and be supervised by an FSA-registered exchange.
In the event of user losses due to misconduct or technical failure, the affiliated exchange would bear joint liability, including potential compensation obligations.
This structure creates a clear chain of accountability while allowing smaller players to innovate safely. It mirrors concepts seen in banking sponsorships for fintechs and reflects Japan’s preference for risk-containment through institutional linkage rather than outright restriction.
Stablecoin Reforms: Expanding Reserve Asset Flexibility
Alongside brokerage reforms, Japan is updating its stablecoin regulatory framework. Currently, only yen-backed stablecoins supported by trust-held deposits are permitted.
The new proposal broadens acceptable reserve assets to include:
- Short-term Japanese government bonds
- High-credit-quality time deposits
- Other low-volatility, liquid instruments
This change gives issuers greater flexibility in managing reserves while preserving stability and redemption guarantees. It also aligns Japan more closely with international standards, potentially boosting cross-border adoption of yen-denominated digital currencies.
👉 Learn how next-gen stablecoins are driving the future of global payments.
Government Vision: Balancing Innovation and Safety
Finance Minister Shunichi Suzuki emphasized that these reforms aim to build a digital payment ecosystem that is both secure and convenient.
“Through this regulatory adjustment, we hope to establish a digital payment environment where users can feel confident while enjoying high levels of accessibility and innovation.”
These words reflect a broader national strategy: to position Japan as a leader in responsible fintech advancement—not by chasing trends, but by crafting smart, adaptive rules that foster long-term growth.
Next Steps: From Proposal to Law
The FSA plans to advance these changes through two key legislative amendments:
- Partial Revision of the Trust Business Act – To support expanded stablecoin reserves
- Amendment to the Fund Settlement Law – To formalize the brokerage license and affiliated oversight model
Once enacted, these laws will reshape Japan’s digital finance landscape, making it easier for diverse businesses to participate in the crypto economy—without compromising on safety.
Frequently Asked Questions (FAQ)
Q: What is a crypto asset brokerage license?
A: It's a proposed regulatory category for companies that facilitate crypto transactions without holding user funds. These intermediaries will operate under lighter rules than full exchanges but must partner with licensed VASPs.
Q: Can brokerage firms store customer crypto?
A: No. The core principle is non-custodial operation. Brokers cannot access or control user assets—reducing systemic risk and simplifying compliance.
Q: Who benefits most from this new license?
A: Gaming platforms, mobile apps, retailers, and telecom providers looking to integrate tokenized rewards, NFTs, or micropayments into their ecosystems.
Q: How will users be protected under the brokerage model?
A: Each broker must affiliate with an FSA-registered exchange, which assumes supervisory responsibility and potential liability for user losses.
Q: When will the new rules take effect?
A: The legislation is expected to progress through Diet sessions in 2025, with implementation likely in 2026 pending approval and technical preparations.
Q: Are foreign companies eligible for the brokerage license?
A: While details are pending, any firm operating in Japan’s market—even digitally—will likely need to comply with local regulations or partner with a licensed domestic entity.
Japan’s move to introduce a crypto brokerage license marks a pivotal moment in its digital finance evolution. By distinguishing between custodial and non-custodial services, Tokyo is crafting a smarter, scalable regulatory model—one that invites innovation while anchoring trust.