Key takeaways
- Japan is considering changing its regulations to allow banks to invest and hold Bitcoin and other crypto assets.
- The Financial Services Agency aims to ensure banking stability and investor security by developing new risk management frameworks for crypto investments.
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Japan’s Financial Services Agency (FSA), which oversees and regulates the country’s financial sector, is considering reforms that would allow banks to acquire and hold digital assets such as Bitcoin for investment purposes, according to a new report from Livedoor.
Discussions on possible regulatory reviews are expected to begin soon within the Financial System Council, an advisory body to the prime minister, the report said.
The FSA intends to introduce regulations taking into account how crypto investments could affect the financial stability of banks. The working group will also discuss risk management systems for digital asset management to mitigate volatility risks.
Under current FSA guidelines, which were updated in 2020, banks are not allowed to hold cryptocurrencies for investment purposes due to concerns about price volatility and potential losses affecting the financial health of banks.
The proposed framework would lift this restriction with additional safeguards, allowing banks to buy and sell digital assets alongside traditional instruments like stocks and bonds under strict financial soundness rules.
The regulator is also considering allowing banking groups to register as crypto asset exchange service providers, a status required to offer cryptocurrency trading services. The agency believes that the entry of trusted banking institutions could create a safer investment environment for retail investors.
