Japan’s FSA has allegedly planned to review regulations that may allow banks to acquire and hold crypto such as Bitcoin for investment purposes.
The initiative would mark a shift in policy, as current guidelines ban banks from holding crypto due to volatility risks, according to a Sunday report from Livedoor News. The report also mentions that FSA reportedly plans to discuss the reform at an upcoming meeting of the Financial Services Council.
Regulating banks in Japan’s crypto space
The move aims to align crypto management with traditional financial products such as government bonds or stocks. Regulators are projected to create a new framework for managing crypto-related risks, such as price swings that could impact a bank’s financial health. If approved, the FSA can impose capital and risk-management requirements before permitting banks to hold these kinds of assets.
The regulator is also pondering whether or not to allow banks to register as licenced crypto exchange operators, allowing them to offer trading and custody services. As the country’s crypto market grows, with over 12 million crypto accounts registered as of February 2025, the FSA will place crypto regulation under the Financial Instruments and Exchange Act (FIEA).
This will make it distinct from the Payments Services Act, optimising investor protection and aligning crypto with securities rules. The regulator also mentioned that issues within the crypto industry resemble those traditionally addressed under the FIEA, so the initiative is appropriate as the challenges employ similar mechanisms and enforcement.
The news comes as three of Japan’s banks, Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Banking Corp. (SMBC) and Mizuho Bank, join forces to issue a yen-pegged stablecoin and simplify corporate settlements while reducing transaction costs. The FSA approved this initiative, clearing the way for fintech JPYC to issue a digital currency pegged to the JPY. The company will register as a money transfer business before issuing the currency, distributing the stablecoin through bank transfers and allowing individuals and firms to receive tokens in digital wallets after purchase.
