Japan’s Financial Services Agency (FSA) is reportedly getting ready to reevaluate regulations that may permit banks to acquire and hold cryptocurrencies like Bitcoin for investment purposes.
This development would represent a significant policy shift, as existing supervisory guidelines, updated in 2020, effectively prohibit banks from holding crypto due to volatility concerns, according to a Sunday report from Livedoor News.
The report indicates that the FSA intends to discuss this reform in an upcoming meeting of the Financial Services Council, which advises the Prime Minister. The initiative seeks to align crypto asset management with traditional financial products such as stocks and government bonds.
Regulators are expected to examine a framework for addressing crypto-related risks, such as sudden price fluctuations that could affect a bank’s financial stability. If approved, the FSA is likely to impose capital and risk management requirements before allowing banks to hold digital assets.
Related: New Japan PM may boost crypto economy, ‘refine’ blockchain regulations
Japan may allow banks to operate licensed crypto exchanges
The FSA is also contemplating permitting banking groups to register as licensed “cryptocurrency exchange operators,” enabling them to directly offer trading and custody services.
Japan’s crypto market is rapidly expanding, with over 12 million crypto accounts registered as of February 2025, approximately 3.5 times more than five years ago, based on FSA data.
At the start of September, the FSA aimed to govern crypto regulation under the Financial Instruments and Exchange Act (FIEA), transitioning it from the Payments Services Act to enhance investor protection and align crypto with securities laws.
The regulator noted that many issues concerning crypto are similar to those traditionally managed under the FIEA, suggesting it may be suitable to implement similar mechanisms and enforcement strategies.
Related: Japan’s new PM may benefit risk assets and crypto markets
Japan’s leading banks to launch yen-pegged stablecoin
Three of Japan’s biggest banks, including Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Banking Corp. (SMBC), and Mizuho Bank, have united to issue a yen-pegged stablecoin intended to simplify corporate settlements and lower transaction costs.
Meanwhile, Japan’s Securities and Exchange Surveillance Commission plans to implement new regulations to prohibit and penalize insider trading in the crypto space.
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