Japan's Financial Services Agency seeks to allow banks to invest in virtual assets

Japan's Financial Services Agency is seeking to revise regulations so that banks can hold virtual assets (cryptocurrencies) such as Bitcoin (BTC) for investment purposes.

On the 20th (Korean time), the Yomiuri Shimbun reported that Japan's Financial Services Agency is discussing measures to allow banks to acquire and hold virtual assets like stocks or government bonds. The intent is to institutionally support banks' participation as trading in virtual assets as financial products expands domestically and internationally.

However, financial authorities plan to introduce certain holding limits and risk management regulations to prevent deterioration of banks' financial soundness. The Financial Services Agency will soon convene a working subcommittee of the Financial System Council to discuss specific risk management systems and the level of regulation.

Currently, the Financial Services Agency's supervisory guidelines effectively prohibit banks from acquiring virtual assets for investment purposes, because virtual assets have high price volatility and large holdings could lead to losses from sharp declines and deterioration of financial structure.

The Financial Services Agency is also considering allowing banking groups to register as virtual asset exchange operators. The goal is to create an environment where individual investors can trade more safely through market entry by trusted banks.

According to the Financial Services Agency, the number of virtual asset trading accounts in Japan exceeded 12 million as of the end of February this year, about 3.5 times higher than five years ago. As the virtual asset market expands, the entry of banks is expected to accelerate asset diversification within the regulated financial sector.