Japan’s Financial Services Agency (FSA) is reportedly reviewing reforms that could allow domestic banks to hold cryptocurrencies like Bitcoin (BTC) and even operate licensed crypto exchanges, marking a significant shift in the country’s financial policy.
According to a report from Livedoor News, the FSA intends to discuss the proposed changes at an upcoming meeting of the Financial Services Council, an advisory body to the Prime Minister. The reform aims to bring crypto asset management in line with traditional investments such as stocks and government bonds.
Banks Could Gain Permission to Hold Crypto
Under current supervisory guidelines—last updated in 2020—Japanese banks are effectively barred from holding cryptocurrencies due to volatility and balance-sheet risk. The proposed reforms would lift these restrictions, potentially allowing banks to invest in and custody digital assets like Bitcoin.
However, the FSA is expected to require strict capital adequacy and risk-management standards before banks can gain direct crypto exposure. The regulator will also explore how to handle market volatility and liquidity risks associated with crypto holdings.
Banks May Operate Licensed Crypto Exchanges
In a parallel move, the FSA is considering letting bank groups register as licensed cryptocurrency exchange operators, giving them authority to offer trading and custody services directly to customers.
This would further integrate crypto into Japan’s regulated financial system — a major step for institutional adoption in Asia’s third-largest economy.
Japan’s crypto market has seen rapid expansion, with over 12 million active crypto accounts as of February 2025, a 3.5x increase compared to five years ago, according to official FSA data.
Regulatory Framework Tightens
Earlier this year, the FSA proposed shifting oversight of crypto assets from the Payments Services Act (PSA) to the Financial Instruments and Exchange Act (FIEA) — a move aimed at enhancing investor protection and aligning crypto with traditional securities laws.
The agency argued that many issues seen in the crypto sector mirror those found in conventional financial markets, making the FIEA a more suitable framework for enforcement.
Japanese Banks Plan Yen-Pegged Stablecoin
Meanwhile, Japan’s top three banks — Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Banking Corp. (SMBC), and Mizuho Bank — have teamed up to issue a yen-pegged stablecoin designed to streamline corporate settlements and lower transaction costs.
At the same time, the Securities and Exchange Surveillance Commission (SESC) plans to introduce new measures to crack down on crypto insider trading, signaling Japan’s balanced approach to fostering innovation while enforcing market integrity.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.