Japan’s Financial Services Agency (FSA) is reportedly preparing to revise regulations that could allow banks to acquire and hold cryptocurrencies such as Bitcoin for investment purposes.
The move would mark a major policy shift, as current supervisory guidelines, revised in 2020, effectively ban banks from holding cryptocurrencies due to volatility risks, it said on Sunday report from Livedoor News.
According to the report, the FSA plans to discuss the reform at an upcoming meeting of the Financial Services Council, an advisory body to the prime minister. The initiative aims to align crypto asset management with traditional financial products such as stocks and government bonds.
Regulators are expected to explore a framework for managing risks associated with cryptocurrencies, such as sharp price swings that could affect a bank’s financial health. If approved, the FSA is likely to impose capital and risk management requirements before allowing banks to hold digital assets.
Related: Japan’s new prime minister could boost cryptoeconomy, ‘clean up’ blockchain regulations
Japan may allow banks to operate licensed crypto exchanges
The FSA is also considering allowing groups of banks to register as licensed “cryptocurrency exchange operators”, allowing them to directly offer trading and custody services.
Japan’s crypto market continues to grow rapidly, with more than 12 million crypto accounts registered as of February 2025, about 3.5 times more than five years ago, according to FSA data.
In early September, the FSA attempted to bring crypto regulation under the Financial Instruments and Exchange Act (FIEA), moving it out of the Payment Services Act to strengthen investor protection and align crypto with securities laws.
The regulator said many issues within crypto resemble those traditionally dealt with under the FIEA, so it may be appropriate to apply similar mechanisms and enforcement.
Related: Japan’s new prime minister could be a boon for the risky asset, crypto markets
Leading Japanese banks to launch yen-pegged stablecoin
Japan’s three largest banks, including Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Banking Corp. (SMBC) and Mizuho Bank, have joined forces to issue a yen-pegged stablecoin with the aim of simplifying corporate settlements and reducing transaction costs.
Meanwhile, Japan’s Securities and Exchange Commission plans to introduce new rules to ban and punish crypto trading.
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