FSA Considers Allowing Banks to Enter the Crypto Market
Japan may soon take a historic step toward integrating cryptocurrencies into its traditional banking system. According to reports from Yomiuri Shimbun, the nation’s Financial Services Agency (FSA) is preparing to discuss reforms that would allow local banks to trade and hold digital assets - a dramatic reversal from its current restrictions.
Under existing FSA supervisory guidelines, Japanese banks are prohibited from owning or dealing in cryptocurrencies due to their price volatility and perceived financial risk. However, the new proposal would let banks treat crypto similarly to stocks or government bonds, provided strong risk mitigation measures are implemented.
If approved, the move could reshape Japan’s financial landscape, opening the door for institutional crypto adoption and establishing the country as a leading crypto-friendly economy in Asia.
Policy Shift Driven by Global Competition
The FSA’s reported shift comes amid growing global momentum for crypto integration into traditional finance, especially as countries like the U.S., Singapore, and the UAE race to attract institutional investors with clear regulatory frameworks.
Japanese policymakers are reportedly motivated by a desire to keep domestic finance competitive while ensuring investor protection and transparency.
If enacted, the new policy would allow banks to directly participate in digital asset markets, potentially offering crypto trading, custody, and investment services to retail and institutional clients.
Additionally, the FSA is considering whether to let banks register as crypto exchanges, enabling customers to buy and sell digital assets safely through regulated banking institutions.
Such integration could make cryptocurrency trading far more accessible for Japan’s retail investors - especially those who prefer dealing with licensed financial institutions over private exchanges.
Strengthening Market Fairness and Compliance
Alongside its efforts to open the door for crypto-friendly banking, the FSA is also cracking down on market misconduct.
The agency reportedly plans to amend existing rules to explicitly prohibit insider trading in digital assets - a move designed to align crypto with traditional securities laws.
Violators could face financial penalties proportional to their illicit profits, underscoring the government’s determination to ensure that the crypto market operates transparently and fairly.
Japan’s Path to Becoming a Crypto Hub
Japan has long been a pioneer in crypto regulation, having been the first major economy to recognize Bitcoin as legal tender under its Payment Services Act in 2017.
Following the infamous Mt. Gox collapse, the country introduced some of the world’s strictest exchange oversight laws, requiring registration, audits, and robust cybersecurity measures.
This latest move - if finalized - would signal that Japan’s regulators now trust the maturity of the crypto market enough to let traditional banks participate.
It could also accelerate Japan’s Web3 and digital finance strategy, aligning with Prime Minister Sanae Takaichi’s recently stated goals to modernize the nation’s economy through blockchain innovation.
What Comes Next
The proposal will be formally discussed at the next Financial Services Council meeting, an advisory body to the Prime Minister. If the FSA gains approval, detailed guidelines for bank participation in crypto markets could be introduced in 2026.
Industry leaders expect that such reforms would attract significant institutional capital, bolster crypto liquidity, and increase public trust in digital assets.
For now, Japan appears ready to bridge the gap between traditional finance and crypto, setting the stage for a new era of regulated digital banking.
