Japan’s FSA may allow banks to hold Bitcoin and operate crypto exchanges

TLDR

• Japan’s FSA is reviewing rules to let banks hold Bitcoin for investment.
• Over 12 million crypto accounts are registered in Japan as of 2025.
• Banks may be allowed to run licensed crypto exchanges under new reforms.
• Japan plans to shift crypto oversight to the Financial Instruments Act.

Japan’s Financial Services Agency (FSA) is reviewing rules that may soon let banks hold Bitcoin and other cryptocurrencies. This potential change would mark a shift from the agency’s current stance, which restricts banks from direct crypto exposure due to price volatility. If approved, banks could also operate licensed crypto exchanges, giving them a larger role in Japan’s fast-growing digital asset sector.

FSA Reviews Crypto Rules for Banks

Japan’s FSA is preparing to review supervisory guidelines that currently block banks from owning crypto assets like Bitcoin. The rules, last updated in 2020, limit banks’ crypto exposure to protect them from price volatility and liquidity concerns.

According to a report from Livedoor News, the FSA will present this proposal during a meeting with the Financial Services Council. This council advises the Prime Minister on financial policy. The reform could align crypto asset management with traditional instruments such as bonds and stocks.

Officials are expected to explore how banks can manage the risks tied to holding crypto. These include sharp price changes that could affect a bank’s balance sheet. If the proposal moves forward, banks may need to meet strict capital requirements and follow new risk-management frameworks.

Bank Groups May Run Licensed Crypto Exchanges

Alongside holding cryptocurrencies, the FSA is also reviewing whether banks should be allowed to operate as licensed crypto exchange operators. Under current law, banks must set up separate companies to offer crypto services.

If the reforms pass, bank groups could register directly and offer services like trading and custody of crypto assets. This could make digital asset services more accessible and secure for customers using established financial institutions.

The FSA aims to create a structure where bank-backed crypto exchanges can operate under similar standards applied to other financial products. This move is being evaluated as part of broader efforts to regulate digital assets under the Financial Instruments and Exchange Act (FIEA), instead of the current Payments Services Act.

Crypto Use in Japan Continues to Grow

Japan’s crypto market has grown rapidly over the past five years. As of February 2025, there were more than 12 million registered crypto accounts in the country. This figure is more than triple the number from five years ago, according to data from the FSA.

This growth has led to calls for tighter rules to protect investors and ensure financial stability. Shifting crypto oversight to the FIEA is seen as one way to achieve this. The FIEA already covers securities and investment products, making it easier to apply tested rules to digital assets.

The FSA said in a recent statement that many challenges in crypto are similar to those in the securities sector. Because of this, applying the same oversight methods could improve compliance and investor protection.

Stablecoin and Insider Trading Developments

In addition to crypto reforms, Japan’s largest banks are working together on a yen-pegged stablecoin. Mitsubishi UFJ Financial Group, Sumitomo Mitsui Banking Corp., and Mizuho Bank plan to launch the stablecoin to help lower business transaction costs.

Meanwhile, the Securities and Exchange Surveillance Commission plans to introduce stricter penalties for insider trading in crypto markets. These measures would support broader reforms aimed at making the digital asset space more secure and transparent.

The FSA’s review marks a major step toward deeper involvement of banks in Japan’s digital asset market. If approved, the changes could reshape how crypto is handled by major financial institutions in the country.

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