Japan FSA to Allow Banks Bitcoin Investment and Crypto Holdings
Japan’s Financial Services Agency (FSA) is set to allow banks to undertake Bitcoin investment and hold other cryptocurrencies under a risk-managed framework. Under proposals, banks would register as crypto exchange service providers and apply strict risk management, capital safeguards, stress tests and exposure limits. The move aligns digital assets with equities and bonds, while safeguarding financial stability. Japan’s crypto market has over 12 million users, growing 3.5-fold in five years. Regulators have already removed apps for unregulated exchanges and facilitated Binance Japan’s PayPay partnership, as major banks develop yen- and dollar-pegged stablecoins for unified digital payments. Formal Bitcoin investment by banks could unlock significant institutional capital, boost market confidence and drive broader crypto adoption.
Bullish
Allowing banks to invest in Bitcoin provides regulatory clarity and legitimizes Bitcoin as a mainstream asset. In the short term, this is likely to support Bitcoin prices by increasing demand from institutional investors and reducing market uncertainty. In the long term, integration of Bitcoin into banking systems and development of stablecoins can enhance liquidity, deepen market infrastructure and foster wider adoption. Historical precedents, such as bank acceptance of equities and bonds, suggest that formalizing Bitcoin investment will further stabilize the market and encourage sustained institutional inflows, reinforcing a bullish outlook.