New Rules Could Reshape Japan’s Crypto Market, Squeezing Small Exchanges

[johnblockbuster]

Japan’s liability-reserve plan is expected to have significant market consequences. Exchanges may face higher operating costs, increased compliance requirements, and pressure to secure large pools of liquid assets or insurance coverage.
Analysts say smaller operators may struggle to meet the standards, potentially accelerating industry consolidation. Customers, however, stand to benefit from faster and more reliable compensation after hacks — a key weakness exposed by long delays in past bankruptcy cases.
The reforms also position Japan as a potential regulatory trendsetter. The EU’s MiCA framework and South Korea’s strict banking-partnership rules show global momentum toward tougher crypto oversight, and Japan’s model could further influence regulators abroad.
Overall, the FSA aims to rebuild trust after a decade of costly breakdowns and to align digital-asset protections with those of established financial markets.

[Nahid Hossen]

Smaller exchanges always feel the pressure first during regulatory shifts.

[Abdul Khan]

Stricter rules may improve safety but reduce competition.