Japan's Financial Services Agency: Plans to allow banks to invest in encryption assets while registering as a Compliance exchange.

The Japan Financial Services Agency (FSA) is considering loosening regulations to allow banking institutions to hold Bitcoin (BTC) and other encryption assets for “investment purposes”, while also planning to register banking operators as compliance exchanges. However, the authorities also emphasize that they will establish relevant regulations for risk control and financial safety to ensure the stability of the banking system.

A comprehensive ban on banks holding encryption assets to maintain financial stability.

According to reports, the revised “Financial Bureau Regulatory Guidelines” in 2020 stated that due to the lack of physical assets backing cryptocurrency and the extreme price volatility, it is explicitly restricted for banks to hold cryptocurrencies for investment purposes.

Because once the price plummets, the finances of banks holding encryption assets will suffer significant losses. Therefore, the policy at that time almost completely prohibited banks from engaging in encryption investments.

The number of encryption users continues to surge, and the FSA is considering relaxing regulations.

According to a report by Japanese media citing FSA data, as of the end of February 2025, the number of domestic cryptocurrency exchange accounts in Japan has exceeded 12 million, an increase of about 3.5 times compared to five years ago. This indicates a significant growth in market demand and reflects the gradually maturing social conditions for regulatory easing.

As the acceptance of cryptocurrency assets as “financial products” increases in domestic and international markets, the FSA has decided to assess whether to relax regulations to allow banks to hold and trade cryptocurrency assets. The goal is to enable banks to legally invest in and manage cryptocurrency assets in the same way they handle stocks and government bonds, while also creating a more transparent and secure operational environment for institutional investors.

Establish risk control and financial security mechanisms

Even with open possession, the financial bureau still plans to establish strict regulations, including:

Evaluate the impact of the proportion of cryptocurrency assets held on bank finances.

Require banks to establish a complete risk control mechanism.

Monitoring the impact of the market value fluctuations of encryption assets on capital adequacy ratio.

These supporting measures will become the prerequisite for the financial bureau to approve banks' investment in encryption assets.

( Note: The capital adequacy ratio refers to the safety indicator for whether a bank can withstand risks. Regulatory bodies such as Japan's Financial Services Agency, Taiwan's Financial Supervisory Commission, and the Basel Agreement require banks to maintain a certain capital adequacy ratio. For example, ordinary banks must maintain a minimum of 8%, while large, systemically important banks may need to maintain 10% to 12%. If the capital adequacy ratio is too low, it indicates that the bank is highly leveraged and poses too much risk, which may lead to requirements for capital increases or restrictions on lending. )

The Financial Supervisory Commission will start discussions on allowing banks to register as cryptocurrency exchanges.

In addition to the investment aspect, the Financial Bureau is also considering allowing banking groups to register as “cryptocurrency exchanges” to legally provide services such as buying and selling transactions and exchanges. If this proposal is approved, it means that Japan's banking industry can directly participate in the encryption market and provide related services to individual and corporate clients.

The FSA hopes to allow highly reputable banking groups to enter the market, enhancing overall transaction security and making it easier for ordinary investors to access encryption investments.

At the same time, the FSA is expected to convene a working group of the “Financial Advisory Council” in the near future, which is an advisory body under the Prime Minister. During this meeting, the direction of legislative amendments will be officially discussed, focusing on how banks can hold encryption assets without affecting financial soundness, and formulating specific regulatory standards.

( Japan plans to regulate cryptocurrency insider trading, imposing fines and even criminal liability )

This article discusses the Japan Financial Services Agency: plans to allow banks to invest in encryption assets, while also registering as a Compliance exchange, first appeared on Chain News ABMedia.