Japan is set to allow trust banks to manage cryptoassets – after a top financial regulator announced plans to roll out legislation that could become legally binding later this year.
The newspaper Nikkei reported that the Financial Services Agency (FSA), the body that polices both the banking sector and the domestic crypto industry wants to “deregulate” trust banks, a measure that will allow these financial institutions to handle coin deposits.
The FSA said that the move would let the institutions treat crypto as “trust assets.” The agency added that cryptoassets were “volatile” and that trading in them “involves high levels of risk.”
The agency said that it was aiming to strengthen investor protection and promote “appropriate” market development by “allowing trust banks” to carry out crypto-related “asset management operations.”
The FSA intends to amend financial sector-related legislation in order to carry out the change, and will hold a one-month consultation on its proposals before enshrining its decision into law.
Nikkei reported that the measure could become effective “as early as autumn” this year.
The news will come as a welcome boon to the domestic banking sector. Last month, key revisions to the Funds Settlement Law were made, allowing conventional banks, asset transfer providers, and trust banks to issue stablecoins that are pegged to the Japanese yen.
The FSA is widely expected to issue further guidance pertaining to both security tokens linked to bonds and tokenized real estate. A number of Japanese firms have expressed their desire to launch security token-related offerings, as well as crypto-powered property projects.
The FSA has been allowed to police the sector with a carte blanche ever since it was given powers over exchanges and wallet providers in September 2017. However, in recent months, the Tokyo-based government and its pro-IT business Prime Minister Fumio Kishida have indicated that they may be prepared to reform laws to ease the tax burden on crypto firms and user in a new phase of Web3-related growth.
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