Japan’s FSA Considers Allowing Banks to Invest in Bitcoin

Japan’s Financial Services Agency (FSA) may allow banks to invest in and hold Bitcoin and other cryptocurrencies. A Financial Services Council working group will review the proposal soon.

If approved, digital assets could be integrated into core financial instruments, allowing banks to invest in crypto like stocks or bonds.
Current rules from 2020 prohibit banks from holding crypto due to volatility concerns. Relaxing these could attract large institutional investments into digital assets.
The proposed system would include strict risk management and capital safeguards, with stress-testing and exposure limits for banks.

The Path to Mainstream Adoption

Japan's crypto market is rapidly growing, with over 12 million users, indicating strong demand.
The policy shift would formalize existing organic adoption and increase public confidence by reducing fraud concerns.
In February, the FSA ordered the removal of certain crypto exchanges from app stores, signaling a move towards regulated environments.
On Oct. 9, Binance Japan partnered with PayPay, reflecting rising demand for digital assets.
Top Japanese banks are collaborating to issue yen and US dollar-pegged stablecoins, aiming to create a unified digital payment ecosystem.