The FSA plans to discuss the proposed reforms at an upcoming meeting of the Financial Services Council, which serves as an advisory body to the prime minister.
Japan’s Financial Services Agency is preparing to review regulations that would allow banks to acquire and hold cryptocurrencies, including Bitcoin, for investment purposes. The reform represents a major policy change for the country’s banking sector.
Current supervisory guidelines, revised in 2020, effectively prohibit banks from holding cryptocurrencies due to volatility concerns. The FSA plans to discuss the proposed reforms at an upcoming meeting of the Financial Services Council, which serves as an advisory body to the prime minister.
The initiative aims to align the management of cryptocurrency assets with traditional financial products like stocks and government bonds. Regulators should establish frameworks to manage crypto-related risks, particularly sharp price fluctuations that could impact the financial health of banks.
The FSA will likely impose capital and risk management requirements before allowing banks to hold digital assets. Officials have raised concerns that banks holding significant amounts of cryptocurrency could suffer significant losses in the event of a sudden price drop, potentially endangering their financial stability.
The agency is also considering allowing banking groups to register as licensed cryptocurrency exchange operators. This designation would allow them to offer trading and custody services directly to clients, beyond current restrictions.
The Japanese crypto market has been growing rapidly, with over 12 million cryptocurrency accounts registered as of February 2025. This figure is approximately 3.5 times the number recorded five years earlier, demonstrating accelerated adoption.
In early September, the FSA sought to place crypto regulation within the Financial Instruments and Foreign Exchange Act, moving oversight away from the Payment Services Act. The move aims to strengthen investor protections and bring cryptocurrencies in line with securities laws. The regulator noted that many crypto-related issues resemble those traditionally addressed under the FIEA, making similar mechanisms and enforcement appropriate.
The FSA plans to establish a new Crypto Bureau next year to address future issues related to cryptocurrencies. The agency is also preparing to present a bill to Parliament in 2026 targeting insider trading in cryptocurrency markets.
Insider trading involves market participants executing trades using confidential information not publicly available. The practice is illegal in Japan and the proposed bill would introduce legal changes affecting everything from Bitcoin to meme coins.
Three of Japan’s largest banks, Mitsubishi UFJ Financial Group, Sumitomo Mitsui Banking Corp and Mizuho Bank, have already joined forces to issue a yen-pegged stablecoin. The project aims to streamline corporate settlements and reduce transaction costs, reflecting growing institutional interest in digital assets.
The FSA’s regulatory review and planned reforms allow Japan to strengthen its role in the global cryptocurrency ecosystem while maintaining financial stability protections for its banking sector.
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