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The Financial Services Agency (FSA) of Japan is reportedly considering comprehensive regulatory reforms that would allow banks to hold cryptocurrencies like Bitcoin (BTC) for investment purposes and even operate licensed crypto exchanges. This move marks a potential turning point in Japan’s approach to digital assets.
According to an October 19 report by Livedoor News, the FSA is evaluating a new legal framework that would permit banks to hold cryptocurrencies such as Bitcoin as investment instruments. This plan could reverse the existing guidelines revised in 2020 which currently prohibit banks from holding crypto assets due to concerns over their high volatility and risk exposure.
Banks May Soon Gain the Right to Invest in and Operate Crypto Exchanges
Japan’s Financial Services Agency (FSA) is developing a new reform plan that could allow banks to hold cryptocurrencies and operate licensed crypto exchanges, bringing digital asset management in line with traditional financial instruments such as stocks and government bonds. The FSA is expected to discuss the reform’s details at a meeting of the Financial Services Council, an advisory body to the Prime Minister. As part of the framework, regulators will introduce new capital and risk management requirements to help banks manage potential price volatility from crypto investments.
If approved, banks will be required to meet a certain capital adequacy threshold before being permitted to hold digital assets.
“The goal is to strengthen investor protection while integrating crypto into the traditional financial system.”
— Excerpt from an internal FSA report
In addition, the FSA is considering allowing banking groups to operate as “licensed crypto exchange operators”, enabling them to directly offer crypto trading and custody services. This move is seen as a major step toward accelerating crypto integration within Japan’s financial sector.
Japan’s Crypto Market Is Expanding Rapidly
According to FSA data, as of February 2025, Japan has over 12 million registered crypto accounts a 3.5× increase compared to five years ago. The growing user base highlights that regulators can no longer overlook the crypto market’s influence.
In September, the FSA proposed bringing crypto regulations under the Financial Instruments and Exchange Act (FIEA) to enhance investor protection and align crypto with securities laws. FSA officials noted that crypto-related risks mirror those of traditional investment products, making similar oversight both logical and necessary.
Japanese Banks Also Lead in Stablecoin Innovation
Japan’s three largest banks Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Banking Corp. (SMBC), and Mizuho Bank have partnered to launch yen-pegged stablecoins aimed at facilitating corporate payments and reducing transaction costs. This initiative is part of Japan’s broader digital finance strategy, accelerating the integration of blockchain and stablecoins into the economy. Meanwhile, the Securities and Exchange Surveillance Commission (SESC) is drafting new rules to ban and penalize insider trading in crypto assets. Together, these measures show Japan’s determination to build one of the world’s most comprehensive crypto regulatory frameworks.
If the FSA reform is enacted, Japan could become the first major economy to permit banks to hold cryptocurrencies, positioning the nation as Asia’s leading force in the digital finance revolution.
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