TLDR
- Japan’s FSA is reviewing rules to let banks hold Bitcoin for investment.
- Over 12 million crypto accounts are registered in Japan as of 2025.
- Banks may be allowed to run licensed crypto exchanges under new reforms.
- Japan plans to shift crypto oversight to the Financial Instruments Act.
Japan’s Financial Services Agency (FSA) is actively exploring new regulations that could allow banks to hold Bitcoin and other cryptocurrencies. This potential change signifies a significant shift from the FSA’s longstanding position, which has typically restricted banks from direct engagement with crypto markets, primarily due to concerns over price fluctuations. If this proposal is realized, banks may also be permitted to operate licensed crypto exchanges, enhancing their role in the burgeoning digital asset landscape in Japan.
FSA Reviews Crypto Rules for Banks
Japan’s FSA is gearing up to revisit supervisory guidelines that currently prevent banks from owning crypto assets like Bitcoin. The existing rules, which were last revised in 2020, aim to shield banks from the inherent volatility and liquidity risks associated with cryptocurrencies. A report by Livedoor News revealed that the FSA plans to present this proposal to the Financial Services Council, a body that advises the Prime Minister on financial matters. If approved, the reform could align the management of crypto assets with more traditional financial instruments such as bonds and stocks.
During this review, officials are expected to delve into strategies for banks to mitigate the risks associated with holding cryptocurrencies. This includes managing the potential impacts of sudden price swings on a bank’s financial health. Should the proposal move forward, banks may need to comply with stringent capital requirements and implement enhanced risk management frameworks.
Bank Groups May Run Licensed Crypto Exchanges
In tandem with the possibility of holding cryptocurrencies, the FSA is contemplating whether banks should also be permitted to operate as licensed crypto exchange operators. Currently, banks are required to establish separate entities to provide any crypto-related services, which can complicate access and increase costs for consumers.
If these reforms are enacted, bank groups might be able to register directly, offering services that include not only trading but also the custody of digital assets. This could significantly enhance the accessibility and safety of digital asset services for consumers, who would then be engaging with established financial institutions rather than standalone crypto platforms.
The FSA’s goal here is to create an ecosystem where bank-backed crypto exchanges function under regulatory standards analogous to those applied to other financial products. This shift forms a part of broader efforts to regulate digital assets under the Financial Instruments and Exchange Act (FIEA), instead of continuing with the older Payments Services Act framework.
Crypto Use in Japan Continues to Grow
The cryptocurrency market in Japan has seen exponential growth over the past five years. As of February 2025, more than 12 million registered crypto accounts exist in the country—a staggering increase from previous years, reported by the FSA.
This surge in interest has prompted discussions around implementing stricter regulations to better protect investors and ensure financial system stability. Shifting regulatory oversight to the FIEA is seen as a strategic move to achieve these aims, given that this legislation already encompasses traditional securities and investment products. Thus, harmonizing oversight for digital assets could streamline compliance and enhance investor protections.
In a recent statement, the FSA acknowledged that many challenges within the crypto landscape bear resemblance to those found in the securities sector. Consequently, adapting existing oversight methods could significantly improve investor compliance and safeguarding measures.
Stablecoin and Insider Trading Developments
In addition to contemplating reforms affecting crypto regulations, Japan’s leading banks are collaborating on the development of a yen-pegged stablecoin. Prominent banking entities, including Mitsubishi UFJ Financial Group, Sumitomo Mitsui Banking Corp., and Mizuho Bank, are looking to introduce this stablecoin to reduce costs associated with business transactions.
Simultaneously, the Securities and Exchange Surveillance Commission is planning to enforce stricter penalties for insider trading occurring within crypto markets. These initiatives represent broader reforms designed to foster a more secure and transparent digital asset environment.
The FSA’s ongoing review signals a pivotal moment for the banking sector’s involvement in Japan’s digital asset market. Should these reforms be implemented, the impact on how major financial institutions engage with cryptocurrencies could be transformative, shaping the future of digital finance in the nation.
