Japan’s FSA to Allow Banks to Trade and Hold Bitcoin
Japan’s Financial Services Agency (FSA) has proposed new rules to let domestic banks directly buy, hold and trade Bitcoin and other digital assets under the Financial Instruments and Exchange Act. Pending approval by the Financial Services Council, banks would operate under a unified prudential framework featuring strict capital requirements, exposure caps, stress tests, AML/CFT controls, asset segregation and market surveillance. The proposal also allows banks to register as cryptocurrency exchange operators, enabling them to offer trading and custody services without separate subsidiaries. Regulators expect these measures to boost market trust, liquidity and both retail and institutional participation in Japan’s Bitcoin market. Key milestones include final guidance on capital treatment, first bank exchange licenses, reclassification of crypto as financial products and potential stablecoin launches like JPYC. The timeline depends on updates to supervisory guidelines or Diet legislation.
Bullish
Allowing Japanese banks to hold and trade Bitcoin under a formal regulatory framework is likely to increase institutional demand and liquidity, boosting market confidence. In the short term, traders may bid up Bitcoin in anticipation of higher corporate flows and easier retail access. Over the long term, integrating Bitcoin into existing banking infrastructure and FSA oversight signals mainstream adoption, potentially reducing volatility and supporting sustained price growth. Historical precedents show that banking support typically has a bullish effect on cryptocurrency markets.