Japan Considers Allowing Banks to Hold Cryptocurrencies
Japan’s Financial Services Agency (FSA) is reportedly exploring regulatory changes that could permit banks to acquire and hold cryptocurrencies, such as Bitcoin, for investment purposes. This potential policy shift could significantly alter the landscape of digital asset adoption within the nation’s financial sector. Current guidelines, updated in 2020, largely prohibit banks from holding cryptocurrencies due to concerns over market volatility. A recent report from Livedoor News highlighted these developments.
💡 This could signal a more open approach by Japan towards integrating digital assets into traditional banking structures.
The FSA intends to discuss these proposed reforms during an upcoming session of the Financial Services Council, a key advisory body to the Prime Minister. The objective is to create an environment where the management of crypto assets mirrors that of conventional financial instruments like stocks and government bonds.
📍 This alignment aims to simplify regulatory oversight and potentially boost investor confidence by treating crypto more like established asset classes.
Regulators are expected to develop a comprehensive framework to manage the inherent risks associated with cryptocurrencies, particularly their significant price fluctuations, which could impact a bank’s financial stability. Should these proposals receive approval, the FSA will likely mandate specific capital and robust risk-management requirements before banks are permitted to hold digital assets.
📊 Establishing clear risk management protocols will be crucial for mitigating potential losses and ensuring the stability of financial institutions engaging with crypto.
Japan May Also Enable Banks to Operate Licensed Crypto Exchanges
In parallel, the FSA is considering allowing banking groups to register as licensed cryptocurrency exchange operators. This would empower them to offer trading and custody services directly to their clientele, further integrating crypto services into the mainstream financial system.
✅ This move could lead to increased accessibility and trust in cryptocurrency trading and holding services for both retail and institutional investors in Japan.
Japan’s cryptocurrency market has experienced substantial growth, with over 12 million registered crypto accounts as of February 2025. This represents a nearly threefold increase compared to five years prior, according to data released by the FSA, underscoring the growing public interest in digital assets.
⚡ The rapid expansion of the crypto market highlights the need for updated and effective regulatory frameworks.
Earlier in September, the FSA initiated efforts to bring cryptocurrency regulation under the purview of the Financial Instruments and Exchange Act (FIEA). This strategic shift from the Payments Services Act aims to enhance investor protection and harmonize crypto regulations with existing securities laws.
📌 The regulator’s rationale is that many aspects of cryptocurrency operations closely resemble those traditionally covered by the FIEA, making it appropriate to apply similar enforcement and regulatory mechanisms.
Leading Japanese Banks Announce Plans for Yen-Pegged Stablecoin
In a significant development, three of Japan’s largest financial institutions—Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Banking Corp. (SMBC), and Mizuho Bank—have collaborated to issue a yen-pegged stablecoin. This initiative is designed to streamline corporate settlements and reduce associated transaction costs, demonstrating a concrete step towards integrating stablecoins into practical business applications.
📍 This collaboration shows a strong commitment from major traditional banks to explore and implement blockchain-based financial solutions.
Concurrently, Japan’s Securities and Exchange Surveillance Commission is reportedly planning to introduce new rules specifically targeting and penalizing crypto insider trading. This demonstrates a proactive approach to maintaining market integrity and fairness within the evolving digital asset space.
📊 Strengthening regulations against illicit activities like insider trading is vital for building a sustainable and trustworthy crypto ecosystem.
Fundfa Insight
Japan is poised to make significant strides in its regulatory approach to digital assets, with potential policy shifts that could allow banks greater involvement in the cryptocurrency market. These developments, coupled with initiatives like the planned yen-pegged stablecoin and efforts to curb insider trading, signal a maturing regulatory environment aimed at fostering innovation while ensuring market stability and investor protection.