Japan May Let Banks Invest in BTC Under New FSA Proposal
FSA Considers Lifting Crypto Ban for Banks
Japan’s Financial Services Agency (FSA) is preparing to review rules that could let domestic banks purchase and hold cryptocurrencies such as BTC for investment purposes, according to a report from Livedoor News on Sunday. The proposal would represent a policy reversal from supervisory guidelines introduced in 2020, which barred banks from holding crypto assets due to price volatility risks.
The FSA plans to discuss the changes at an upcoming session of the Financial Services Council, a key advisory body to the Prime Minister. Officials said the aim is to bring crypto in line with how financial institutions handle stocks and government bonds, subject to the identical oversight and capital requirements.
Regulators are expected to review frameworks for managing price risk, liquidity exposure, and the potential impact on bank balance sheets. Any approval is likely to include capital adequacy and risk management conditions before banks are allowed to hold BTC or other digital assets directly.
Investor Takeaway
Bank-Backed platforms Under Review
The FSA is also weighing whether to let banking groups register as licensed cryptocurrency platform operators, allowing them to offer trading and custody services to clients directly. Such a move would deepen the integration of crypto into Japan’s financial system, where interest among continues to rise.
Japan’s crypto market has expanded sharply in recent years. The FSA reported that by February 2025, there were more than 12 million registered crypto accounts, roughly 3.5 times the number recorded five years earlier. The surge reflects both retail participation and greater institutional involvement through licensed platforms and custodians.
In ahead September, the regulator proposed moving crypto oversight from the Payments Services Act to the Financial Instruments and platform Act (FIEA). The shift would align crypto with securities markets and strengthen investor protection, giving authorities more power over disclosures, trading practices, and enforcement. The FSA noted that many of the risks in digital assets resemble those viewn in conventional securities.
Stablecoin Projects and New Enforcement Rules
Japan’s largest banks are already deepening their involvement in digital assets. Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Banking Corp. (SMBC), and Mizuho Bank have partnered to issue a yen-pegged stablecoin designed to streamline corporate payments and reduce settlement costs. The initiative aligns with Tokyo’s push to modernize payment infrastructure while maintaining control over financial stability.
Meanwhile, Japan’s Securities and platform Surveillance Commission (SESC) is drafting new rules to ban and penalize insider trading in crypto markets, extending existing securities laws to digital assets. Regulators view the measure as part of a broader effort to bring crypto trading in line with mainstream compliance standards.
Investor Takeaway
Global Context
Japan’s review follows similar regulatory discussions in the United States and Europe. While U.S. regulators remain divided on how banks should handle digital assets, Tokyo’s methodical approach—framed within existing securities laws—could offer a model for other jurisdictions viewking to balance innovation and stability.
The FSA’s deliberations come as Japan’s new Prime Minister has voiced support for refining blockchain regulations and encouraging the country’s role in global crypto markets. If banks are permitted to hold and trade cryptocurrencies under strict capital and risk conditions, Japan could become one of the first major economies to normalize BTC exposure at the institutional level.
The outcome of the upcoming Financial Services Council meeting will determine whether the reform advances to the legislative stage, setting the tone for Japan’s next phase of digital asset regulation.
