coindesk.com
Japan's Financial Services Agency (FSA) is preparing regulations, requiring local digital asset exchanges to maintain liability reserves to protect users from hacks and other operational failures, according to a report by Nikkei.
The recommendation for cryptocurrency firms to establish liability reserve funds is expected to be included in a report by the Financial System Council, an advisory panel to the Financial Services Agency (FSA), following its upcoming meeting on Wednesday.
Implementing the directive to establish liability reserves could significantly enhance investor confidence, fostering greater trust in the local digital asset market and inviting broad range of players to the market, including both retail and institutions.
The move comes weeks after reports said that the FSA is mulling a reform to allow banks to hold and trade digital assets like bitcoin.
Japan’s JPYC recently debuted the world’s first yen-pegged stablecoin, which is fully redeemable digital yen backed by domestic deposits and Japanese government bonds (JGB).