Nikolas Sargeant
Japan's Financial Services Agency is preparing to review regulations that could allow banks to acquire and hold cryptocurrencies like Bitcoin for investment purposes. This represents a significant shift from current supervisory guidelines revised in 2020, which effectively prohibit banks from holding crypto assets due to concerns about market volatility.
The FSA plans to discuss the regulatory reform at an upcoming Financial Services Council meeting, an advisory body to the Prime Minister. The initiative aims to bring crypto asset management in line with how banks handle traditional financial products such as stocks and government bonds. Regulators are expected to develop a framework addressing crypto-specific risks, particularly sharp price fluctuations that could affect a bank's financial stability.
Beyond holding cryptocurrencies, the FSA is also considering allowing bank groups to register as licensed cryptocurrency exchange operators. This would enable traditional financial institutions to offer trading and custody services directly to customers, further integrating crypto into Japan's mainstream financial system.
Japan's cryptocurrency market has experienced rapid growth, with more than 12 million crypto accounts registered as of February 2025—approximately 3.5 times higher than five years earlier, according to FSA data. The regulator has also been working to shift crypto oversight from the Payments Services Act to the Financial Instruments and Exchange Act to strengthen investor protection and align digital assets with securities regulations.
This regulatory shift comes alongside broader efforts to position Japan as a crypto-friendly jurisdiction. The FSA has requested the government reduce cryptocurrency tax rates from the current miscellaneous income framework—which taxes digital assets between 15% and 56%—to a flat rate of approximately 20%, similar to stock taxation. Finance Minister Katsunobu Kato has publicly endorsed cryptocurrencies as legitimate portfolio diversification tools, signaling a significant policy evolution that could reduce tax burdens by more than half for many crypto investors and strengthen Japan's position as a leading digital asset hub in Asia.
