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FSA Pushes Crypto Adoption in Traditional Finance
Japan’s Financial Services Agency (FSA) is moving toward a significant policy shift that could allow banks to hold Bitcoin and other crypto assets on their balance sheets. The move would mark a departure from the agency’s traditionally cautious stance on digital assets.
A Shift from Caution to Controlled Integration
In 2020, the FSA implemented supervisory guidelines that effectively prevented banking groups from investing in cryptocurrencies, primarily due to their perceived volatility. However, recent developments suggest the agency is re-evaluating its position in light of a maturing domestic crypto landscape.
As of February 2025, over 12 million crypto accounts had been opened in Japan—a 3.5-fold increase in just five years. This growing adoption has prompted regulators to reconsider digital assets as part of a diversified financial portfolio.
Permitting banks to allocate capital into crypto could enhance portfolio diversity and improve long-term profitability, positioning cryptocurrencies as a legitimate asset class within traditional finance.
Balancing Innovation with Risk Control
While the FSA supports increased institutional participation in the crypto space, it remains committed to risk mitigation. Upcoming discussions at the Financial System Council will focus on establishing capital requirements and exposure limits for bank-held crypto assets.
A key issue is whether to impose caps on how much digital currency banks can hold relative to their capital base. These measures aim to ensure that crypto integration does not undermine the overall stability of the banking sector.
The FSA’s approach reflects a broader global trend: enabling innovation while safeguarding systemic integrity. As one council member stated, “This is about building secure foundations, not just chasing trends.”
Stablecoin Strategy Strengthens Infrastructure
Parallel to these efforts, Japan’s three major banks—MUFG, SMFG, and Mizuho—are jointly developing stablecoins for corporate use. The initial rollout will feature a yen-pegged stablecoin, with future plans for a USD-backed version.
These stablecoins will be built on a shared platform developed by Progmat Inc., leveraging the Payment Services Act of 2023. The unified standard ensures interoperability, allowing seamless fund transfers between corporate clients of different banks.
The first major implementation is expected within the current fiscal year, with Mitsubishi Corporation set to test stablecoin-based settlements. The primary goal is to streamline corporate payments and reduce cross-border transaction costs using blockchain infrastructure.
A New Role for Traditional Banks in Crypto Markets
In a further effort to bridge traditional finance (TradFi) and digital assets, the FSA is also considering allowing banking groups to register as Crypto Asset Exchange Service Providers. This would enable licensed banks to play a direct role in digital asset markets while maintaining regulatory compliance.
By combining a regulated framework with growing institutional infrastructure, Japan is positioning itself as a leading force in responsible crypto adoption—where innovation meets oversight.
