- Japan’s Financial Services Agency is reportedly planning reforms to allow banks to acquire and hold cryptocurrencies such as Bitcoin.
- Under current rules, effective since 2020, banks have been barred from holding crypto due to volatility risks.
- The FSA is also pushing to reclassify crypto under the Financial Instruments and Exchange Act (FIEA), introduce insider-trading bans for crypto.
Several media reports claim that Japan’s Financial Services Agency (FSA) is reviewing regulatory revisions that could allow banks to hold cryptocurrencies such as Bitcoin for investment purposes. According to Livedoor News, this proposal will be tabled before the Financial Services Council, an advisory body to the Prime Minister, for further discussion.
Regulatory evolution: Scaling protections & legal clarity
This proposed shift is tied to the FSA’s broader agenda, which is to reclassify crypto assets under the stricter Financial Instruments and Exchange Act (FIEA). Earlier, crypto was only considered under the Payment Services Act. This move will enable the application of securities-style rules such as insider trading restrictions, oversight of disclosures, and enforcement mechanisms. In fact, as part of that effort, the FSA plans to introduce new laws to prevent crypto insider trading, with a draft bill expected around 2026.
Under the new bank-holding proposal, banks would need to adhere to capital buffers, risk-management standards, volatility controls, and perhaps limits on exposure. The aim is to gradually bring crypto under the same guardrails that traditional financial instruments operate under, increasing investor protection while opening institutional pathways.
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Another step in this direction is to consider letting banks operate as licensed crypto exchanges. The FSA is also considering allowing bank groups to register as licensed ‘cryptocurrency exchange operators,’ enabling them to offer trading and custody services directly.
FSA’s past posture on crypto
Historically, the FSA has maintained a cautious, conservative stance toward crypto. As of the 2020 update of supervisory guidelines, banks were effectively prohibited from holding crypto assets due to concerns over financial stability and price volatility. Throughout the past few years, the FSA has regulated crypto exchanges under the Payment Services Act, mandated registration, AML/KYC, customer fund protections, and oversight of exchange operations. Japan has also tolerated a steep taxation regime for crypto gains, treated as ‘miscellaneous income’ and resisted wide approval of spot crypto ETFs.
However, Japan’s crypto market continues to grow rapidly, with more than 12 million crypto accounts registered as of February 2025. This is about 3.5 times higher than five years ago, according to FSA data.
