Crypto Bullish News? Japan Considers Allowing Banks to Hold and Trade Bitcoin
According to reports, Japan’s Financial Services Agency (FSA) is considering reforms to allow domestic banks to purchase and hold digital assets, including Bitcoin, for investment purposes.
This would mark a significant departure from the conservative stance set in 2020, when Japanese regulators banned local banks from holding cryptocurrencies due to concerns over volatility and financial stability.
Under the proposed framework, banks would be permitted to trade digital assets like stocks and government bonds, with specific safeguards to ensure financial soundness. The FSA plans to develop risk management protocols to mitigate the potential impact of sharp price fluctuations on bank balance sheets.
These reforms are expected to be discussed at working group meetings of Japan’s Financial System Council, an advisory body to the prime minister.
Sources indicate that Japanese officials are also exploring mechanisms to allow banking groups to register as licensed cryptocurrency exchange operators.
As early as 2020, Japan implemented stringent cryptocurrency regulations through amendments to the Payment Services Act and the Financial Instruments and Exchange Act, establishing a comprehensive framework covering crypto asset service providers, custody services, and derivatives trading.
Expanding Digital Asset Accessibility
Industry insiders suggest that Japan’s regulators aim to create a safer environment for cryptocurrency investment by involving established banking institutions, thereby expanding digital asset accessibility in Japan.
The reform proposal comes as Japan faces severe economic challenges, with its debt-to-GDP ratio reaching ~240%, the highest globally. This has prompted policymakers to explore tools to address financial pressures, including low-interest-rate policies and targeted regulations.
In this context, digital assets could offer investors alternative return channels outside the traditional financial system, spurring the government to promote their adoption.
In recent years, Japan’s cryptocurrency market has grown rapidly. As of February 2025, crypto account registrations in Japan exceeded 12 million, a ~3.5x increase from five years ago.
Major Japanese banks have signaled interest in expanding crypto services. Mitsubishi UFJ Financial Group, Sumitomo Mitsui Banking Corporation, and Mizuho Bank have jointly issued stablecoins pegged to both the yen and the dollar.
Digital asset reserve company Metaplanet exemplifies Japan’s booming crypto market. The company has incorporated Bitcoin into its financial reserves and launched Bitcoin-backed financial products to generate returns in Japan’s low-yield market. It also funds Bitcoin purchases through equity and preferred stock financing, similar to Strategy’s model.
Following weekend reports of Japan’s consideration to allow banks to hold and trade Bitcoin, Bitcoin’s price rebounded on Monday from last Friday’s slump, climbing back above $111,000.