Japan Eyes Allowing Banks to Hold Cryptocurrencies Amid Rapid Market Growth

Japan's Financial Services Agency (FSA) is considering a major policy shift for its banking sector by permitting banks to acquire and hold cryptocurrencies, including Bitcoin, for investment purposes. This move would align cryptocurrency asset management with traditional financial products like stocks and government bonds.

The current supervisory guidelines, revised in 2020, effectively prohibit banks from holding crypto due to volatility concerns. However, the FSA plans to establish frameworks for managing crypto-related risks, particularly sharp price fluctuations that could impact banks' financial health.

Regulators are expected to impose capital and risk-management requirements before permitting banks to hold digital assets. The agency is also considering allowing bank groups to register as licensed cryptocurrency exchange operators, enabling them to offer trading and custody services directly to customers.