Japan’s Financial Services Agency Considers Allowing Banks to Invest in Bitcoin and Cryptocurrencies

Japan's FSA Considers Crypto Investments for Banks

The Financial Services Agency (FSA) of Japan is reportedly evaluating regulatory changes that could allow banks to invest in cryptocurrencies like Bitcoin. This would be a significant policy shift from the current guidelines, revised in 2020, which prohibit banks from holding cryptocurrencies due to their volatility risks, as reported by Livedoor News.

The FSA plans to discuss this potential reform during an upcoming Financial Services Council meeting, aiming to align crypto asset management with traditional financial products like stocks and bonds.

Regulatory Framework and Risk Management

The FSA is expected to develop a framework to manage crypto-related risks, including price volatility, which could affect a bank's financial health. If approved, banks may face new capital and risk management requirements before they are allowed to hold digital assets.

Potential for Licensed Crypto Exchanges

Additionally, the FSA is considering allowing bank groups to become licensed cryptocurrency exchange operators, enabling them to offer trading and custody services directly. The Japanese crypto market continues to grow, with over 12 million crypto accounts registered as of February 2025, a significant increase from five years ago.

In early September, the FSA proposed moving crypto regulation under the Financial Instruments and Exchange Act (FIEA) from the Payments Services Act to enhance investor protection and align with securities laws.

Yen-Pegged Stablecoin Initiative

Japan's top banks, including Mitsubishi UFJ Financial Group, Sumitomo Mitsui Banking Corp., and Mizuho Bank, plan to issue a yen-pegged stablecoin to improve corporate settlements and reduce transaction costs. Concurrently, the Securities and Exchange Surveillance Commission aims to introduce rules against crypto insider trading.