Japan’s Financial Services Agency (FSA) is proposing regulatory reforms to permit local banks to trade and hold cryptocurrencies, treating them similarly to stocks or government bonds while introducing safeguards against price volatility. This shift aims to integrate digital assets into the mainstream financial system, following a surge in crypto adoption with over 12 million registered accounts as of February 2025.
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Banks may soon register as licensed cryptocurrency exchange operators, enabling direct trading and custody services for customers.
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The FSA plans to transfer crypto oversight from the Payments Services Act to the Financial Instruments and Exchange Act for enhanced investor protections.
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Major banks like Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho are collaborating on a yen-backed stablecoin to streamline business payments.
Japan’s FSA eyes reforms for banks to trade cryptocurrencies amid rising adoption. Explore regulatory shifts, stablecoin developments, and market growth in 2025. Stay ahead with COINOTAG insights on digital finance integration.
What is Japan’s FSA Planning to Allow Banks to Trade Cryptocurrencies?
Japan’s FSA is considering reforms that would enable local banks to trade and hold cryptocurrencies under updated rules, aligning them with traditional assets like stocks and government bonds. This initiative addresses the growing crypto market in Japan, where registered accounts have reached over 12 million as of February 2025, a 3.5-fold increase from five years prior. According to a report from Yomiuri Shimbun, the agency aims to mitigate risks from price fluctuations through targeted safety measures, fostering a more inclusive financial ecosystem without compromising stability.
How Will Crypto Regulation Change for Japanese Banks?
The FSA proposes shifting cryptocurrency regulation from the Payments Services Act to the Financial Instruments and Exchange Act (FIEA), which governs securities and offers robust investor safeguards. This move would subject digital assets to clearer supervision and stricter compliance standards, addressing common issues like market manipulation that mirror those in traditional finance. As explained by FSA officials, most crypto-related challenges align with existing FIEA frameworks, making this revision a practical step toward harmonizing oversight.
Under the proposed rules, banks could register as licensed cryptocurrency exchange operators, allowing them to provide trading and custody services directly to clients. This would build on Japan’s established crypto infrastructure, where activity has expanded rapidly amid global digital asset trends. The Financial Services Council, advising the Prime Minister on key financial policies, is set to review the proposal in an upcoming meeting, potentially marking a pivotal moment for institutional involvement in crypto.
Frequently Asked Questions
Can Japanese Banks Currently Hold or Trade Cryptocurrencies?
Currently, Japanese banks are prohibited from holding cryptocurrencies due to regulatory restrictions citing their volatile prices. The FSA’s proposed reforms would lift these bans, permitting banks to engage in crypto activities under the FIEA with built-in risk controls, as outlined in recent agency discussions reported by Yomiuri Shimbun.
What Role Do Stablecoins Play in Japan’s Crypto Strategy for Banks?
Stablecoins are central to Japan’s evolving crypto strategy, with major banks like Mitsubishi UFJ Financial Group, Sumitomo Mitsui Banking Corp., and Mizuho Bank developing a yen-pegged stablecoin to facilitate faster, cost-effective business payments across the financial system. This initiative supports broader regulatory integration by promoting stable digital assets that reduce volatility risks for institutional adoption.
Key Takeaways
- Regulatory Shift to FIEA: Transferring crypto oversight to the Financial Instruments and Exchange Act will enhance protections and align digital assets with securities regulations.
- Institutional Access Expansion: Banks could soon offer crypto trading and custody, capitalizing on the market’s growth to over 12 million accounts by February 2025.
- Stablecoin Collaboration: Leading banks’ yen stablecoin project aims to streamline payments, signaling Japan’s commitment to practical digital finance innovations.
Conclusion
Japan’s FSA-led reforms represent a significant step toward allowing banks to trade cryptocurrencies as legitimate financial instruments, backed by the Financial Instruments and Exchange Act and complemented by stablecoin advancements from major institutions. With crypto registration surging and national debt at approximately 240% of GDP, these changes underscore a maturing approach to digital assets. COINOTAG, a trusted source in cryptocurrency analysis, will continue monitoring developments—investors should prepare for increased institutional participation in this dynamic market. Published by COINOTAG on October 15, 2025; last updated October 15, 2025.
Japan’s plan to let banks handle cryptocurrencies shows a major policy shift toward treating digital assets as part of the formal financial system.
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