Key takeaways
- Japan is considering regulatory changes to allow banks to invest and hold Bitcoin and other crypto assets.
- The Financial Services Agency aims to ensure banking stability and investor security by developing new risk management frameworks for cryptocurrency investments.
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Japan’s Financial Services Agency (FSA), which supervises and regulates the country’s financial sector, is considering reforms that would allow banks to acquire and hold digital assets such as Bitcoin for investment purposes, according to a new report from Livedoor.
Talks on possible regulatory reviews are expected to begin shortly at the Financial System Council, an advisory body to the Prime Minister, according to the report.
The FSA intends to introduce regulations that consider how cryptocurrency investments could affect the financial stability of banks. The working group will also discuss risk management systems for managing digital assets to mitigate volatility risks.
Under current FSA guidelines, which were updated in 2020, banks are not allowed to hold cryptocurrencies for investment due to concerns about price volatility and potential losses affecting the banks’ financial health.
The proposed framework would reverse that restriction with additional safeguards, allowing banks to buy and sell digital assets alongside traditional instruments such as stocks and bonds under strict financial soundness rules.
The regulator is also considering allowing banking groups to register as cryptoasset exchange service providers, a status required to offer cryptoasset trading services. The agency believes that the entry of trusted banking institutions could create a safer investment environment for retail investors.
