Japan's Financial Services Agency plans to allow banks to acquire and hold cryptocurrencies for investment

Japan's Financial Services Agency (FSA) is preparing to review regulations that could allow banks to acquire and hold cryptocurrencies such as bitcoin for investment purposes, in what would be a major policy shift after the current regulatory guidelines were amended in 2020 to effectively prohibit banks from holding cryptocurrencies based on volatility risk. The FSA plans to discuss the reform at the Financial Services Commission meeting, which aims to bring crypto asset management into line with traditional financial products such as stocks and government bonds. It will also explore a framework for managing crypto-related risks. If approved, capital and risk management requirements may be imposed before banks are allowed to hold digital assets. In addition, the FSA is also considering allowing banking groups to register as licensed "cryptocurrency exchange operators" to provide trading and custody services. The Japanese crypto market is growing rapidly, and the FSA sought to shift crypto regulation from the Payment Services Act to the Financial Instruments and Exchange Act in early September to strengthen investor protection. At the same time, Japan's three major banks joined forces to issue yen-linked stablecoins, and the Securities and Exchange Commission plans to introduce new regulations to ban and punish crypto insider trading.