The Japanese Financial Services Agency has proposed relaxing the reserve requirements for trust banks' issuance of stablecoins and implementing travel rules.

The Japan Financial Services Agency (FSA) has recently proposed to relax the reserve requirements for trust banks' issuance of stablecoins and implement travel rules. The FSA mentioned that it is unwilling to allow banks other than trust banks to issue stablecoins. As for the stablecoins issued by trust banks, the FSA hopes to relax the current requirement of holding all assets in the form of bank demand deposits. However, the FSA also intends to implement travel rules, requiring KYC for transfers of stablecoins issued by trust banks. In 2022, Japan passed legislation for Stable Coin, supporting banks, licensed remittance companies, and trust companies to issuance Stable Coin. As part of its working group demonstration, the Financial Services Agency distinguishes between licensed on-chain issuance of Stable Coin and public on-chain issuance of Stable Coin. It is satisfied with all three types of Stable Coin existing in licensed on-chain, but is cautious about allowing licensed deposit-taking institutions to hold non-licensed on-chain issuance Stable Coin.