Japan’s Financial Services Agency (FSA) is preparing to review a groundbreaking regulatory shift that could allow Japanese banks to acquire and hold cryptocurrencies such as Bitcoin for investment purposes, according to new report.
Under current guidelines, last revised in 2020, banks are effectively prohibited from holding crypto due to volatility and balance-sheet risk concerns. The new proposal signals a major policy evolution, aiming to treat digital assets more like traditional investments such as stocks and government bonds.
The FSA will reportedly discuss the reform during an upcoming Financial Services Council meeting, an advisory body to the Prime Minister. The plan seeks to modernize Japan’s approach to digital asset management while introducing robust risk and capital requirements to safeguard financial stability.
If approved, the framework would establish clear rules for how banks can manage exposure to volatile crypto markets, marking a decisive step toward deeper integration between traditional finance (TradFi) and digital assets.
In a parallel move, regulators are also considering letting bank groups register as licensed crypto exchange operators, paving the way for institutions to directly offer trading and custody services.
The dual reform, expanding both asset ownership and service provision, could position Japan as a regional leader in regulated institutional crypto adoption, bridging the gap between mainstream banking and blockchain-based finance.
