Japan Approves Crypto Intermediary Law, Tightens User Asset Controls

In Brief:

New law allows firms to offer crypto services without registering as full exchanges.

Government gains authority to require local asset storage in crisis situations.

Japan’s Senate has passed an amendment to the Funds Settlement Act, introducing a new legal framework for the “crypto-asset intermediary industry.” The change allows companies to offer matchmaking and related crypto services without registering as licensed exchanges, reducing entry barriers for fintech firms.

The amendment is aimed at encouraging innovation in crypto finance by allowing more flexible business models to operate legally in the space, while still subject to regulatory oversight.

A key addition is the “domestic retention order,” giving authorities the power to require platforms to hold part of user assets within Japan. The clause was introduced to help prevent sudden asset outflows in the event of exchange failures, referencing risks highlighted by the FTX collapse.

The revised law is expected to take effect within one year of publication and marks another step in Japan’s efforts to regulate crypto while supporting growth and innovation.

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