Japanese FSA Considers Liability Reserves for Crypto Exchanges

Japan’s financial regulator is considering legislation requiring crypto exchanges to maintain liability reserves to protect customers from hacks or security breaches.

A rreport by The Nikkei said the Financial Services Agency (FSA) plans to submit a bill to Parliament in 2026.

The legislation would require cryptocurrency exchanges to meet similar requirements as securities companies, which currently hold reserves ranging from $12.7 million to $225 million, depending on trading volume.

Until now, crypto exchanges were able to circumvent reserve requirements by storing a portion of customer assets in cold storage, which are wallets that are not connected to the internet.

The new framework will create formal procedures for returning assets to customers in the event of a crypto exchange going bankrupt. This will include allowing court-appointed administrators to manage customer refunds.

To ease the financial burden, the FSA is considering allowing exchanges to purchase insurance rather than holding their entire cash reserves.

Japan rocked by series of crypto hacks

The planned warrant follows a series of security breaches targeting Japanese crypto exchanges.

Perhaps the most notable hack that Japan is still recovering from is the collapse of the now-defunct Mt. Gox platform. Hackers drained 850,000 BTC from the platform in 2014, pushing the exchange into bankruptcy. Some repayments did not begin until a decade later, and now extend until October 2026.

BREAKING: Mt. Gox delayed BTC redemptions until the following year.

Less selling pressure on the market.

It’s very optimistic. pic.twitter.com/3vWJrgFIey

-Ash Crypt (@AshCrypto) October 27, 2025

In early 2018, Coincheck suffered one of the largest crypto exchange hacks at the time after approximately $530 million worth of NEM tokens were stolen. Shortly after the incident, the FSA raided Coincheck’s office in Tokyo.

In September of the same year, the Zaif platform was hacked for around $62 million. Japan’s FSA later issued a business improvement order, citing insufficient explanations of how the hack occurred. The regulator also highlighted the platform’s shortcomings in terms of risk management.

Most recently, DMM Bitcoin lost 4,502 BTC worth around $305 million in May last year. With this incident, North Korean hackers compromised an employee of Ginco, the wallet software provider that DMM had hired for transaction management.

Last month, approximately $21 million in Bitcoin and other cryptocurrencies were stolen from addresses linked to SBI Crypto, a mining pool owned by the SBI Group. Blockchain investigations have identified laundering activity through the Tornado Cash transaction mixer as well as potential connections to North Korea.

Earlier this month, the Japanese FSA begin evaluate a rule that would require any company providing crypto management systems, such as the software used by DMM Bitcoin before its violation, to file notice with regulators.

Asia ranks second for Bitcoin thefts, Japan has one of the highest number of victims

On-chain analytics firm Chainalysis said in a mid-year report that Asia ranked second for Bitcoin thefts and had a record number of digital heists.

Top 10 countries by stolen value per victim (Source: Chainalysis)

It states that Japan, Indonesia, and South Korea rank among the top countries in terms of casualties, while Asia ranks third in terms of Ethereum losses.

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