The post Japan to mandate liability reserves for ‘crypto’ exchanges appeared on BitcoinEthereumNews.com. Homepage > News > Business > Japan to mandate liability reserves for ‘crypto’ exchanges Japan’s top financial sector regulator, the Financial Services Agency (FSA), is planning new rules that will require digital asset exchanges in the country to maintain liability reserves to protect customers against losses resulting from hacks and security breaches. A report on November 24 from local outlet The Nikkei revealed that the FSA will submit legislation to parliament in 2026 that would require local digital asset exchanges—which currently do not have reserve requirements if they store customer funds in offline cold wallets—to set aside liability reserves to quickly compensate customers for losses resulting from “unauthorized outflows” of digital assets. The specific reserve amounts are still under review, but the proposed new rules are reportedly expected to follow similar lines to those already in place for traditional securities firms, which are required to hold reserves ranging from ¥2 billion to ¥40 billion ($12.7 million to $255 million). According to The Nikkei report, a working group of the Financial System Council (FSC)—an advisory body to the Prime Minister—has been examining the legal regulations for digital assets and will soon compile a report on their findings. The new liability reserve requirements will be a part of this report. The proposed stricter rules appear designed to enhance consumer confidence in the digital asset space following a string of high-profile security breaches targeting Japanese exchanges, most notably the May 2024 hack of Japanese Bitcoin exchange DMM, which resulted in $305 million in losses. Japan was also the site of one of the most notorious crypto-sector scandals, the 2014 hack and subsequent collapse of the world’s largest BTC exchange at the time, Mt. Gox. The exchange went bankrupt in early 2014 after it lost 800,000 BTC to a hack. Since then, its creditors, who… The post Japan to mandate liability reserves for ‘crypto’ exchanges appeared on BitcoinEthereumNews.com. Homepage > News > Business > Japan to mandate liability reserves for ‘crypto’ exchanges Japan’s top financial sector regulator, the Financial Services Agency (FSA), is planning new rules that will require digital asset exchanges in the country to maintain liability reserves to protect customers against losses resulting from hacks and security breaches. A report on November 24 from local outlet The Nikkei revealed that the FSA will submit legislation to parliament in 2026 that would require local digital asset exchanges—which currently do not have reserve requirements if they store customer funds in offline cold wallets—to set aside liability reserves to quickly compensate customers for losses resulting from “unauthorized outflows” of digital assets. The specific reserve amounts are still under review, but the proposed new rules are reportedly expected to follow similar lines to those already in place for traditional securities firms, which are required to hold reserves ranging from ¥2 billion to ¥40 billion ($12.7 million to $255 million). According to The Nikkei report, a working group of the Financial System Council (FSC)—an advisory body to the Prime Minister—has been examining the legal regulations for digital assets and will soon compile a report on their findings. The new liability reserve requirements will be a part of this report. The proposed stricter rules appear designed to enhance consumer confidence in the digital asset space following a string of high-profile security breaches targeting Japanese exchanges, most notably the May 2024 hack of Japanese Bitcoin exchange DMM, which resulted in $305 million in losses. Japan was also the site of one of the most notorious crypto-sector scandals, the 2014 hack and subsequent collapse of the world’s largest BTC exchange at the time, Mt. Gox. The exchange went bankrupt in early 2014 after it lost 800,000 BTC to a hack. Since then, its creditors, who…