Japan Reconsiders Allowing Banks to Hold Crypto Assets

Japan’s Financial Services Agency (FSA) is planning a major policy change. It is reviewing rules that could let banks buy and hold cryptocurrencies like Bitcoin. If approved, this would be a big step for Japan’s banking system and could bring more traditional financial institutions into the crypto market.

A New Direction for Japan’s Banking System

For years, Japanese banks have stayed away from crypto. Rules updated in 2020 stopped them from holding digital assets because of price swings and risks. 

Now in 2025, the FSA thinks the market has grown enough to take another look. The agency plans to bring the matter before the Financial Services Council, which advises the Prime Minister. 

It wants to study how crypto can be grouped with regular investments like government bonds and company shares.
This move shows Japan’s growing interest in making digital assets a real part of its economy, not just a risky side project.

Japan Plans Careful Rules for Banks Entering Crypto Market

The FSA is not rushing to relax the rules. Officials are looking for new ways to handle the risks that come with crypto that could affect banks’ finances.

If the plan goes ahead, banks will need to meet clear capital and risk-control standards before they can hold or trade digital assets. Regulators may also let bank groups apply for licenses to run crypto exchanges. This would allow them to offer trading and storage services directly to customers.

At the same time, regulators are tightening controls. The Securities and Exchange Surveillance Commission is working on new rules to stop and punish insider trading in crypto. These steps show Japan’s strong goal of building a fair and trustworthy digital asset market.

Crypto Adoption Grows in Japan

Japan’s crypto market has grown quickly in recent years. By February 2025, there were over 12 million registered crypto accounts. Reportedly, this is more than triple the number from five years ago. This fast growth is pushing the FSA to update old rules and adapt to today’s financial realities.

In September, the agency suggested moving crypto regulation under the Financial Instruments and Exchange Act (FIEA), instead of the Payment Services Act. This change would treat crypto more like regular securities, giving investors better protection and clearer rules.

The FSA explained that many problems seen in crypto, such as market manipulation and investor risk, are already familiar in traditional finance. So, applying similar rules could make the market fairer and safer for everyone.

Meanwhile, Japan’s biggest banks, Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Banking Corp. (SMBC), and Mizuho Bank, are not standing still. They have joined forces to launch a yen-backed stablecoin to make business payments easier and cheaper.

This partnership shows how major banks are ready to use blockchain technology to improve their main services. The FSA’s planned reforms could give them the clear legal backing they need to grow these projects further.