Japan Considers Rule Change To Allow Banks Hold and Trade Bitcoin and Other Cryptos

Japan’s Financial Services Agency (FSA) is considering reviewing rules that could allow banks to buy, hold, and trade Bitcoin and other cryptocurrencies. The change would take Japan one step closer to institutional adoption of cryptocurrencies by reversing the current guidelines that stop banks from owning digital assets.

Banks in Japan Could Buy and Trade Cryptocurrencies Soon

The FSA of Japan is mulling a new reform that will give banks the power to buy and hold digital assets such as bitcoin for investment purposes. The reform seeks to treat crypto assets the same way banks handle stocks and government bonds.

The regulators raised the volatility of prices as the primary threat to bank stability. The new proposal would form a structure to deal with these risks. Banks would have to comply with capital requirements prior to the possession of digital assets.

They would have strict risk management systems also. The steps are meant to cushion banks against sudden price moves in crypto markets. Existing regulations (2020) prohibit the keeping of cryptocurrencies by banks.

As reported by the Japanese newspaper Yomiuri, the FA will discuss these new guidelines at the upcoming Financial Services Council meeting. This council gives advice to the Prime Minister on financial policy matters.

FSA Could Let Banks Operate Licensed Crypto Exchanges

In addition to allowing banks to buy and hold cryptos, the FSA is also considering allowing financial institutions to register as licensed “cryptocurrency exchange operators.” This will allow Japanese banks to directly offer trading and custody services to their clients.

The shift would open the door for mainstream financial institutions to compete with existing crypto platforms, positioning Japan as a hub for regulated digital finance in Asia.

There has been a surge in crypto activity, with more than 12 million registered crypto accounts as of February 2025. To accommodate this growth, Japan’s FSA has been working to strengthen crypto regulation throughout 2025 to facilitate more growth. 

The FSA proposed transferring crypto oversight to the Financial Instruments and Exchange Act in September in a move to take crypto regulation away from the Payment Services Act. The law currently governs securities and investment products. According to the FSA, crypto-related issues are similar to those that already fall under the securities law. 

In the meantime, three of the largest lenders in the country, MUFG, SMBC, and Mizuho Bank, are collaborating on a stablecoin that is backed by the yen in order to simplify business payments. Should it pass, it would mark the introduction of the first major digital currency to be issued by the leading banking institutions in Japan.

Japan’s Crypto Push Comes As a Critical Time

The growing push of Japan into the cryptocurrency market comes at a critical time when the country is battling with an exceptionally high debt-to-GDP ratio of 240%. 

The surging debt left has been predicted to lead to low interest rates, high inflation, and increased regulation to manage the debt burden. By leading into cryptocurrencies more, Japan could attract investors seeking alternatives to traditional financial systems.