TLDR
- Japan’s Financial Services Agency is considering allowing banks to hold Bitcoin and other cryptocurrencies for investment
- The proposal would reverse 2020 rules that banned banks from owning digital assets due to price volatility
- Banks could also apply for licenses to operate cryptocurrency exchanges and offer trading services
- Japan now has 12 million crypto accounts, a 3.5-fold increase from 2020
- Major Japanese banks are already developing a yen-backed stablecoin for corporate payments
Japan’s financial regulator is preparing to change rules that currently prevent banks from holding cryptocurrencies. The Financial Services Agency will discuss the proposal at an upcoming advisory meeting with government officials.
The reforms would let banks buy and hold Bitcoin and other digital assets as investments. Banks could manage crypto the same way they handle stocks and bonds. This represents a complete reversal of 2020 guidelines that blocked such activities.
Current rules prohibit banks from owning cryptocurrencies because of price volatility risks. The FSA determined that sharp price movements could threaten bank stability. The new proposal includes strict risk management requirements and capital rules to address these concerns.
Banks would need to demonstrate strong financial controls before receiving approval. They must show they can handle crypto price swings without damaging their balance sheets. The regulatory framework aims to protect the banking system while allowing innovation.
New Licensing for Bank-Operated Exchanges
The FSA proposal also covers cryptocurrency exchange operations. Bank groups could register as licensed exchange operators under the plan. This would let them offer crypto trading and custody services directly to customers.
The move brings traditional financial institutions into the digital asset exchange business. Banks would compete with existing crypto platforms while offering added credibility. Customers could access crypto services through established banking relationships.
Japan’s crypto market has expanded rapidly over the past five years. The country recorded over 12 million crypto accounts in February 2025. That figure represents 3.5 times the number from five years earlier.
Regulatory Framework Updates
The FSA has been updating its crypto oversight throughout 2025. In September, regulators proposed shifting crypto regulation under the Financial Instruments and Exchange Act. This law currently governs securities and traditional investments.
Moving crypto from the Payment Services Act to securities law strengthens investor protections. The FSA noted that crypto-related issues mirror those in traditional financial markets. The change aligns digital assets with established regulatory standards.
Japan’s three largest banks are already working with digital assets. Mitsubishi UFJ Financial Group, Sumitomo Mitsui Banking Corp, and Mizuho Bank launched a joint stablecoin project. The yen-pegged token targets corporate settlement systems and transaction cost reduction.
The banking reform discussions happen as Japan manages high government debt levels. The country’s debt-to-GDP ratio sits at 240 percent. Some financial analysts view this environment as favorable for alternative asset adoption.
The Financial Services Council will review the proposals in upcoming meetings. The council advises the Prime Minister on financial policy decisions. If approved, the FSA will establish detailed implementation guidelines for banks entering the crypto market.
Japanese banks would join a growing global trend of traditional finance embracing digital assets. The reforms position Japan’s banking sector to participate in crypto markets while maintaining regulatory oversight.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
