**Japan’s Financial Services Agency Considers Allowing Banks to Hold Cryptocurrencies**
Japan’s Financial Services Agency (FSA) is reviewing regulations that could allow banks to buy and hold cryptocurrencies like Bitcoin for investment purposes. This proposed change would reverse the current guidelines from 2020 that ban banks from owning digital assets, primarily due to concerns about price volatility and its impact on bank stability.
The FSA plans to discuss these reforms at an upcoming Financial Services Council meeting, an advisory body to the Prime Minister on financial policy matters. The goal is to treat crypto assets similarly to how banks currently handle stocks and government bonds, creating a more standardized approach to digital asset management.
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**New Framework for Risk Management and Capital Requirements**
Under the new proposal, banks interested in holding cryptocurrencies would be required to meet specific capital requirements and implement strict risk management systems. These safeguards are designed to protect banks against the sharp price fluctuations typical of crypto markets, thereby maintaining overall financial system stability.
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**Banks May Also Operate Licensed Cryptocurrency Exchanges**
In addition to holding cryptocurrencies, the FSA is considering allowing bank groups to register as licensed cryptocurrency exchange operators. This would enable them to offer trading and custody services directly to their customers, integrating trusted financial institutions further into the crypto ecosystem.
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**Rapid Growth in Japan’s Crypto Market**
Japan’s crypto market has expanded significantly in recent years. As of February 2025, there are over 12 million registered crypto accounts in the country—an increase of 3.5 times compared to five years ago. This growth underscores the importance of developing a robust regulatory framework that balances innovation with investor protection.
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**Regulatory Developments Throughout 2025**
Throughout 2025, the FSA has actively worked on strengthening crypto regulations. Notably, in September, the agency proposed moving crypto oversight under the Financial Instruments and Exchange Act, which currently governs securities and investment products. This shift would transition crypto regulation away from the Payment Services Act, aligning it more closely with existing securities laws and enhancing investor protection measures.
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**Major Banks Collaborate on Yen-Pegged Stablecoin Project**
In a related development, three of Japan’s largest banks—Mitsubishi UFJ Financial Group, Sumitomo Mitsui Banking Corp, and Mizuho Bank—have joined forces to develop a yen-pegged stablecoin. The project aims to improve corporate settlements and reduce transaction costs, indicating a broader strategic interest among established financial institutions in digital assets.
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**Looking Ahead: A Major Shift in Japan’s Digital Asset Approach**
The proposed banking reforms signal a significant shift in Japan’s approach to digital assets. By treating cryptocurrencies similarly to traditional investments and instituting appropriate safeguards, regulators aim to foster innovation while maintaining the stability of the financial system.
With a national debt-to-GDP ratio of 240 percent, some analysts suggest that alternative assets like cryptocurrencies may become increasingly attractive in Japan’s financial landscape. As the country continues to develop its regulatory framework, the balance between growth, innovation, and risk management remains a central focus.
https://coincentral.com/japan-fsa-reviews-rules-to-let-banks-hold-bitcoin-and-operate-crypto-exchanges/
