- Japan’s FSA considers allowing banks direct access to cryptocurrency trading.
- Proposed reforms aim to merge digital assets with traditional banking systems.
- New rules may curb insider trading and boost investor confidence nationwide.
Japan’s Financial Services Agency (FSA) is considering a major shift that could reshape the country’s financial landscape. According to local reports, the regulator is exploring a proposal that would allow domestic banks to trade and hold cryptocurrencies. The current supervisory guidelines restrict banks from dealing in digital assets due to concerns over price volatility.
The proposal aims to align the crypto market with traditional financial instruments such as stocks and government bonds. By revising the rules, the FSA intends to build a structured system that supports crypto trading within the banking sector. This move is also expected to encourage stronger oversight while ensuring that financial risks are properly managed.
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🇯🇵 BREAKING: Japan’s financial regulator is reportedly considering allowing banks to directly hold and invest in #crypto.
If approved, this could unlock a wave of institutional adoption across Asia and mark a major shift in how traditional finance engages with digital assets. pic.twitter.com/YMVyVIE1Al
— 36crypto – Daily Cryptocurrency News and Update (@36Crypto2) October 20, 2025
Policy Reform to Strengthen Crypto Regulation
Moreover, the FSA plans to discuss the potential reform during an upcoming session of the Financial Services Council, an advisory body to the Prime Minister. The discussion will reportedly focus on designing a framework that balances innovation with investor protection.
Officials are seeking to create regulatory guardrails that prevent excessive exposure to volatile assets while maintaining financial stability.
Additionally, the agency is considering enabling banks to register as cryptocurrency exchanges. This initiative would allow traditional financial institutions to offer digital asset trading services directly to retail investors. The change could simplify access to the crypto market, providing investors with trusted and regulated platforms backed by established banks.
Cracking Down on Unfair Market Practices
The FSA has been gradually tightening measures to ensure transparency in digital asset trading. Reports suggest the regulator is preparing amendments that explicitly outlaw the use of non-public information for crypto transactions. Those found guilty of insider trading would face penalties tied to the profits gained through illegal activities.
Overall, the reform under consideration represents another step toward integrating cryptocurrencies into Japan’s mainstream financial system. If approved, it could enhance investor confidence and broaden participation in the digital economy while maintaining strong regulatory oversight.
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