Japan’s Financial Services Agency (FSA) is on the verge of a groundbreaking regulatory shift that could allow banks to buy and hold cryptocurrencies such as Bitcoin. This potential change is a direct response to the growing interest and participation in the crypto market, which has seen a meteoric rise in user accounts in recent years.
During an upcoming Financial Services Council meeting, the FSA is expected to discuss reforms that would enable financial institutions to treat crypto assets similarly to traditional investments like stocks and government bonds. This pivotal moment could redefine how banks engage with digital currencies, potentially paving the way for broader adoption of cryptocurrencies across Japan.
Current regulations, established in 2020, prohibit banks from holding cryptocurrencies, primarily due to concerns over their extreme price volatility. The proposed reforms would introduce a framework that allows banks to navigate these risks, requiring them to meet specific capital requirements and implement robust risk management systems.
Banks Could Enter the Crypto Exchange Market
In addition to holding cryptocurrencies for investment purposes, the FSA is also considering allowing bank groups to register as licensed cryptocurrency exchange operators. This would empower banks to offer trading and custody services directly to their customers, potentially transforming the landscape of cryptocurrency exchanges in Japan.
As of February 2025, Japan boasts over 12 million registered crypto accounts—a staggering increase of 3.5 times compared to five years ago. This surge indicates a growing appetite for digital assets among the Japanese populace, leading regulators to reassess the existing framework governing cryptocurrencies.
Throughout 2025, the FSA has focused on enhancing regulations surrounding crypto assets. Recently, the agency suggested moving crypto oversight under the Financial Instruments and Exchange Act, which currently governs securities and investment products. This realignment aims to provide stronger investor protections and categorize crypto issues under a legal framework that aligns more closely with traditional financial instruments.
Major Banks Collaborate on Stablecoin Initiative
In a parallel development, three of Japan’s largest banks—Mitsubishi UFJ Financial Group, Sumitomo Mitsui Banking Corp, and Mizuho Bank—are collaborating on the creation of a yen-pegged stablecoin. This initiative aims to enhance corporate settlements and reduce transaction costs, showcasing the banks’ commitment to integrating digital currencies into their operations.
If enacted, these proposed banking reforms would signify a major evolution in Japan’s regulatory approach to digital assets. By enabling banks to handle cryptocurrencies through established investment protocols, regulators hope to maintain financial stability while fostering innovation in the sector.
Given Japan’s substantial debt-to-GDP ratio of 240 percent, some analysts argue that the current economic climate may amplify the appeal of alternative assets like cryptocurrencies. The ongoing development of the regulatory framework for digital assets is a critical step towards ensuring that Japan remains competitive in the rapidly evolving global crypto landscape.
