Japan Considers Allowing Banks to Hold Bitcoin and Crypto Assets

Japan’s Financial Services Agency (FSA) is reportedly reviewing a proposal that could permit banks to invest in and hold Bitcoin (BTC) and other cryptocurrencies, signalling a potential shift towards mainstream adoption of digital assets. The development, reported by Livedoor News, comes as a working group within the Financial Services Council prepares to assess the proposal.

If approved, the move would treat crypto holdings similarly to traditional financial instruments such as stocks or government bonds, rather than speculative assets. Under current regulations, implemented in 2020, Japanese banks are prohibited from holding cryptocurrencies due to their volatility. Relaxing these restrictions could open the door to significant institutional capital flows into Bitcoin and other digital assets.

The proposed framework would reportedly include strict risk management measures, capital safeguards, exposure limits, and stress testing to ensure financial stability while encouraging innovation.

Japan’s crypto market has expanded rapidly in recent years, now boasting over 12 million users, a 3.5-fold increase over five years. Experts say the policy shift would formalise an existing trend of rising adoption while bolstering public confidence and reducing fraud risks.

Recent developments highlight the market’s momentum. In February, the FSA ordered Apple and Google to remove several unlicensed crypto exchanges, including KuCoin and Bybit, from their app stores. In October, Binance Japan partnered with payments provider PayPay, following PayPay’s acquisition of a 40% stake in the platform—a clear signal of growing demand.

In parallel, Japan’s three largest banks—Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group—have collaborated to issue yen- and US dollar-pegged stablecoins, aiming to establish a unified digital payments ecosystem.