For years, a key hurdle for mainstream crypto adoption has been the absence of government-backed guarantees, like the deposit insurance that protects bank customers. Now, financial regulators in the United Kingdom and Japan are exploring new frameworks that could bring a similar level of security to the digital asset space.

Japan Proposes Mandatory Reserves for Crypto Exchanges

In Japan, the Financial Services Agency (FSA) has proposed a rule that would make user protection funds mandatory for cryptocurrency exchanges. This move formalizes a practice that some major platforms adopted voluntarily after the collapse of FTX, but shifts it from a voluntary gesture to a legal requirement.

While these emergency reserves mark a significant step toward legally enforced insurance for the crypto sector, they still differ from the protections offered to traditional bank deposits. A key distinction is the lack of a shared, government-guaranteed pool of emergency funds to bail out a failing platform during a deposit run.

Bank of England Considers Liquidity Backstop for Stablecoins

Meanwhile, the Bank of England (BoE) is tackling trust from a different angle by considering an emergency backstop for stablecoin issuers. The proposal would establish a lending facility to provide fiat liquidity during a crisis, ensuring users can always redeem their stablecoins for cash.

This support wouldn’t be universal. It would only apply to regulated, pound sterling (GBP)-denominated stablecoins deemed systemically important. To qualify, these digital assets would already need to be fully collateralized with highly liquid assets like bank deposits and short-term UK government debt.

If adopted, these measures in the UK and Japan would give the digital asset industry something it has never had before: a state-managed fail-safe. By echoing the confidence that deposit insurance brings to traditional banking, these new safeguards could pave the way for greater trust and broader adoption of cryptocurrencies and stablecoins.