Japan Considering Allowing Commercial Banks to Trade Virtual Assets

Japan's Financial Services Agency (FSA) is reported to be planning to discuss measures to allow domestic banks to trade virtual assets (cryptocurrencies).

According to the Yomiuri Shimbun on the 20th (local time), the FSA is considering revising existing supervisory guidelines that have prohibited banks from holding virtual assets on the grounds of volatility. The proposed revision would essentially allow banks to buy and sell cryptocurrencies like stocks or government bonds.

The policy discussion aims to establish regulatory mechanisms that can minimize financial risks while institutionally guaranteeing the banking sector's entry into the cryptocurrency market. The FSA plans to formally put the matter on the agenda at a meeting of the Financial Services Council, an advisory body to the prime minister.

The FSA is also considering allowing banks to register as virtual asset exchanges so that retail investors can access the market through more reliable financial institutions. This is interpreted as a measure to complement the existing exchange-centered structure and improve retail investor accessibility.

Meanwhile, the FSA is preparing legal revisions to create a fair trading environment in the cryptocurrency market. The revisions are expected to explicitly prohibit unfair trading using insider information and to impose financial penalties proportional to illicit gains on violators.