Japan's FSA Considers Allowing Banks to Hold Cryptocurrencies, Including Bitcoin

Japan’s Financial Services Agency (FSA) is reportedly planning to review regulations that might allow banks to acquire and hold cryptocurrencies such as Bitcoin for investment purposes.

This potential policy change would represent a significant shift from the current supervisory guidelines, which were revised in 2020, and effectively prevent banks from holding crypto due to associated volatility risks, according to a recent report by Livedoor News.

The FSA intends to discuss this reform at an upcoming Financial Services Council meeting, which serves as an advisory body to the Prime Minister. The goal of this initiative is to bring crypto asset management in line with conventional financial products such as stocks and government bonds.

Regulators are anticipated to evaluate a framework for addressing risks linked to digital assets—such as sudden price fluctuations that could affect a bank’s financial stability. If the reforms are approved, it is expected that the FSA will impose capital and risk-management mandates before allowing banks to hold digital assets.

Japan May Permit Banks to Operate Licensed Crypto Exchanges

The FSA is also exploring the option to allow bank groups to register as licensed “cryptocurrency exchange operators,” which would enable them to provide trading and custody services directly.

Japan’s crypto market continues to expand rapidly, with over 12 million crypto accounts registered as of February 2025, which is approximately 3.5 times higher than five years ago, based on FSA data.

At the beginning of September, the FSA sought to move crypto regulation under the Financial Instruments and Exchange Act (FIEA), transitioning it from the Payments Services Act to enhance investor protection and align cryptocurrency regulation with securities laws.

The regulator noted that many issues relating to cryptocurrencies resemble those traditionally managed under the FIEA, indicating that it might be prudent to apply similar mechanisms and enforcement strategies.

Japan’s Major Banks to Introduce a Yen-Pegged Stablecoin

In other developments, three of Japan’s largest banking institutions, including Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Banking Corp. (SMBC), and Mizuho Bank, are collaborating to issue a yen-pegged stablecoin aimed at facilitating corporate settlements and decreasing transaction costs.

Meanwhile, Japan’s Securities and Exchange Surveillance Commission plans to implement new regulations to prohibit and penalize crypto insider trading.

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