Japan Plans to Let Banks Hold Bitcoin and Digital Assets
Japan’s Financial Services Agency (FSA) is planning big changes to its rules. These changes could allow Japanese banks to buy, hold, and trade bitcoin and other digital assets. This would be the first time banks in Japan can directly invest in cryptocurrencies.
New Rules Under Review
The plan is now being reviewed by the Financial Services Council. This group advises the Prime Minister. They are also considering letting banks run bitcoin exchanges. If approved, banks could offer bitcoin trading services to their customers.
Currently, banks in Japan cannot hold digital assets for investment. This rule started in 2020. Regulators were worried about the risks from bitcoin’s price changes. Big price swings could hurt a bank’s financial health.
Bitcoin Treated Like Stocks and Bonds
The FSA wants to treat bitcoin like other financial products. These include stocks and government bonds. The goal is to let banks handle digital assets the same way they handle securities. The FSA believes it is time to bring digital assets into the regular financial system.
Strict Risk Controls to Protect Banks
The FSA will allow banks to hold digital assets but with strong rules. These rules will include limits on how much banks can invest. Banks will also have to do stress tests. These tests check if banks can handle big price drops in digital assets without problems.
Bitcoin is known for its price swings. Holding a lot of bitcoin could cause big losses if prices fall fast. To avoid this, the FSA is creating a strong risk management system. The next working group meeting will focus on how banks can manage these risks.
Banks Could Become Cryptocurrency Exchange Operators
Another part of the plan is to let banks register as cryptocurrency exchange operators. Right now, only licensed digital asset companies can offer trading and custody services. Banks must create separate companies to enter this market.
If the new rules pass, banks can offer bitcoin trading within their own group. This will increase trust and safety. Banks have strong compliance and security systems. This could make it easier and safer for people to invest in bitcoin.
Regulatory Oversight May Shift
The FSA is also thinking about moving digital asset rules from the Payments Services Act to the Financial Instruments and Exchange Act (FIEA). The FIEA covers stocks and other investment products. The FSA says many digital asset challenges are like those in the securities market. So, similar investor protection rules may apply.
Japan’s Careful but Forward-Looking Approach
Experts say Japan is taking a cautious but forward-looking approach to digital assets. Japan has been active in creating clear rules for cryptocurrencies. This helps the country have better discussions about new financial technologies.
This move could change Japan’s financial world. It may also help more people invest in bitcoin safely and easily.
