• Japan’s Financial Services Agency is possibly going to give a green light for banks to invest in cryptocurrency.
• The measure might put digital currencies on the same level as traditional investments such as stocks and bonds.
• The whole process will take place in an atmosphere of trust and crypto will be completely integrated into Japan’s financial system.

The FSA’s proposal comes in the wake of Japan’s impressive soft and bold steps towards regulating and legitimizing cryptocurrency. FSA is seriously planning to convert banks to invest and amplify their portfolios with crypto. Such a decision would substantially contradict the authorities’ stance becoming a customer of the indispensable revolt taking place right now in the finance boom.

On the meeting of the upcoming FSA’s Financial Services Council, the issue will finally be brought up and their decision might be awaited. The department up to now predicts that if cryptocurrencies were treated the same way as conventional instruments then the issuance of government bonds and the flow of stocks would be very easy.

In the end, a balanced and amicable decision is to be made, one that allows for the opening of opportunities, but, at the same time, keeps the system under control.

Also Read: Japan Plans to Crack Down on Crypto Insider Trading With New Strict Law

Way Forward for Cryptocurrency

In the event of a successful vote, the reform will open the door for banks to enter the world of cryptocurrencies but, of course, under strict and tight-watched regulations. The whole procedure would involve setting aside capital, implementing risk controls as well as being able to bear the loss from the market’s fluctuations.

Such measures are essential in a market where even the minor incidents can cause prices to skyrocket or plummet within a short time. However, the change might allow banks to get integrated into contemporary finance and capture the attention of the tech-savvy younger generation who prefer to invest in digital assets.

Banks Likely to Act as Custodians of Cryptocurrency

The FSA is also considering if banks should be authorized to operate as licensed cryptocurrency exchange. In this case, banks would be able to provide Trading and custodial services to customers directly. As a result, crypto trading would be as hassle-free as checking a bank account, a notion that is attractive to both regulators and investors who desire safety and ease of use.

Crypto trading in Japan has surged significantly. The number of active accounts reached more than 12 million in February 2025, which is three times the number in 2020.

The government is now intending to regulate cryptocurrency under the Financial Instruments and Exchange Act. This would confer regulation and trust akin to that of traditional securities through the strengthening of supervision, the requirement for maintaining transparency, and an increase in the proximity between crypto and traditional securities.

However, the largest banks in Japan, namely Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho, are already getting ready for this future. They are working together to create a yen-stablecoin that will be faster and cheaper for settlement. All this together indicates that Japan has taken a step forward and is now ready to welcome cryptocurrency as a new chapter in its financial history rather than as a threat.

Also Read: SoftBank’s PayPay Acquires 40% of Binance Japan in Fintech Push: Report