The Financial Services Agency (FSA) of Japan is reportedly exploring reforms that would enable domestic banks to acquire and hold digital assets, including Bitcoin, for investment purposes.
This represents a significant shift from the cautious approach adopted in 2020, when local banks were prohibited from holding cryptocurrencies due to concerns about volatility and financial stability.
With the proposed framework, banks could trade digital assets in a manner akin to stocks and government bonds, accompanied by specific safeguards to ensure their financial security. The FSA intends to establish risk management protocols to mitigate the potential consequences of sudden price fluctuations on banks’ balance sheets.
The anticipated reforms are set to be discussed shortly at a working group meeting within the Financial System Council, which serves as an advisory body to the Prime Minister.
Officials are said to be investigating options that would permit banking groups to register as licensed cryptocurrency exchange operators.
Back in 2020, Japan established strict regulations around cryptocurrencies through updates to the Payment Services Act (PSA) and the Financial Instruments and Exchange Act (FIEA). These regulations created a detailed framework for crypto asset service providers, custodial businesses, and derivatives trading.
Japan as a secure crypto environment
By involving well-established banks, regulators aim to foster a safer space for crypto investment while increasing access to digital assets throughout Japan.
The timing of these proposed reforms is noteworthy, as Japan is currently grappling with significant economic difficulties. The nation’s debt-to-GDP ratio stands at around 240%, one of the highest globally, prompting policymakers to consider various tools to alleviate financial pressures, including low interest rates and targeted regulations.
In this landscape, digital assets may provide investors with alternative means for returns outside conventional financial systems, potentially enhancing adoption.
Japan’s cryptocurrency market has experienced rapid growth in recent years. As of February 2025, more than 12 million cryptocurrency accounts were registered in the country, reflecting nearly a 3.5-fold increase compared to five years prior.
Major Japanese banks have already expressed their interest in expanding crypto services. Mitsubishi UFJ Financial Group, Sumitomo Mitsui Banking Corp., and Mizuho Bank are collaborating to issue stablecoins pegged to both the Japanese yen and the U.S. dollar.
A prime example of Japan’s flourishing crypto market is Metaplanet. Metaplanet has acquired and maintained Bitcoin as a treasury reserve while launching Bitcoin-backed financial products to generate income in Japan’s low-yield environment.
The company finances its Bitcoin investments through equity and preferred shares, similar to Strategy.
