TOKYO / LONDON (IT BOLTWISE) – In a significant move, Japan could soon authorize its banks to hold cryptocurrencies like Bitcoin. This potential change in financial regulations aims to equate digital assets with traditional financial products. Japan’s financial regulator FSA plans to discuss the reform at an upcoming Financial Services Council meeting.
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Japan’s Financial Services Agency (FSA) is considering a significant change to its regulations that could allow banks to hold cryptocurrencies such as Bitcoin. This potential reform would represent a departure from current guidelines, revised in 2020, that prohibit banks from owning cryptocurrencies due to volatility risks. According to industry reports, the FSA plans to discuss this reform at an upcoming meeting of the Financial Services Council, an advisory body to the prime minister.
The initiative aims to bring the management of crypto assets in line with traditional financial products such as stocks and government bonds. Regulators are expected to explore a framework to manage crypto-related risks, such as sudden price fluctuations that could affect a bank’s financial health. If the reform is approved, the FSA will likely impose capital and risk management requirements before banks are allowed to hold digital assets.
Additionally, the FSA is considering allowing banking groups to register as licensed “cryptocurrency exchange operators,” which would allow them to offer trading and custody services directly. The Japanese crypto market continues to grow rapidly, with more than 12 million registered crypto accounts by February 2025, about 3.5 times higher than five years ago, FSA data shows.
Earlier in September, the FSA sought to place crypto regulation under the Financial Instruments and Exchanges Act (FIEA), moving it away from the Payment Services Act. This is intended to strengthen investor protection and bring crypto into compliance with securities laws. The regulator explained that many issues within the crypto industry are similar to those traditionally addressed under the FIEA, so it may be appropriate to apply similar mechanisms and enforcement measures.
In a further step, three of Japan’s largest banks, including Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Banking Corp. (SMBC) and Mizuho Bank, the launch of a yen-pegged stablecoin. This is intended to simplify company accounting and reduce transaction costs. At the same time, the Japanese Securities and Exchange Commission is planning to introduce new rules to ban and punish insider trading in cryptocurrencies.
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