Japan FSA Reviews Rules to Let Banks Hold Bitcoin and Operate Crypto Exchanges

TLDR

• Japan’s Financial Services Agency is reviewing regulations to allow banks to hold cryptocurrencies like Bitcoin for investment purposes
• Banks could also register as licensed cryptocurrency exchange operators to offer trading and custody services
• Current guidelines from 2020 ban banks from holding crypto due to volatility concerns
• The FSA plans to discuss reforms at an upcoming Financial Services Council meeting with the Prime Minister’s advisory body
• Japan has over 12 million registered crypto accounts as of February 2025, up 3.5 times from five years ago

Japan’s Financial Services Agency is reviewing rules that could allow banks to buy and hold cryptocurrencies like Bitcoin. The change would reverse current guidelines that stop banks from owning digital assets.

The FSA plans to discuss these reforms at an upcoming Financial Services Council meeting. This council advises the Prime Minister on financial policy matters. The review aims to treat crypto assets the same way banks handle stocks and government bonds.

Current rules from 2020 ban banks from holding cryptocurrencies. Regulators cited price volatility as the main risk to bank stability. The new proposal would create a framework to manage these risks.

Banks would need to meet capital requirements before holding digital assets. They would also need strict risk management systems in place. These safeguards aim to protect banks from sharp price swings in crypto markets.

Banks Could Operate Licensed Exchanges

The FSA is also considering letting bank groups register as cryptocurrency exchange operators. This would allow them to offer trading and custody services directly to customers. The move would bring established financial institutions into the crypto exchange business.

Japan’s crypto market has grown rapidly in recent years. The country now has over 12 million registered crypto accounts as of February 2025. This number is 3.5 times higher than it was five years ago.

The FSA has been working to strengthen crypto regulation throughout 2025. In September, the agency proposed moving crypto oversight under the Financial Instruments and Exchange Act. This law currently governs securities and investment products.

The shift would move crypto regulation away from the Payment Services Act. The FSA stated that crypto issues closely match those already covered under securities law. This alignment would strengthen investor protection measures.

Major Banks Launch Stablecoin Project

Three of Japan’s largest banks are working on a yen-pegged stablecoin. Mitsubishi UFJ Financial Group, Sumitomo Mitsui Banking Corp, and Mizuho Bank joined forces on the project. The stablecoin aims to improve corporate settlements and lower transaction costs.

The proposed banking reforms would mark a major shift in Japan’s approach to digital assets. Banks would handle cryptocurrencies using similar processes as traditional investments. Regulators plan to implement safeguards to maintain financial system stability.

Japan’s debt-to-GDP ratio stands at 240 percent. Some analysts suggest this high debt level creates conditions where alternative assets become more attractive. The country continues to develop its regulatory framework for digital assets.

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