Japanese FSA prohibits banks and insurers from selling virtual assets…permits securities firms

The Japanese Financial Services Agency (FSA) is reportedly preparing a regulatory proposal to prohibit banks and insurance companies from selling virtual assets (cryptocurrencies) and to allow sales only by securities firms and other financial investment institutions.

According to the Asahi Shimbun on the 23rd (local time), the Japanese FSA is considering applying the Financial Instruments and Exchange Act (FIEA) by treating virtual assets as investment products, and is preparing a regulatory proposal to ban banks and insurance companies from selling virtual assets while allowing sales only by securities firms and other financial investment institutions.

The authorities judged that protection for depositors and insurance policyholders is necessary, citing large price volatility and the risk of leakage due to cyberattacks. However, considering that online securities firms already handle virtual assets, they plan to allow sales by securities subsidiaries under banks and insurance companies for competitive fairness.

The Asahi Shimbun reported, "Banks or insurance companies holding and managing virtual assets on their own will be possible only after risk management systems have been sufficiently strengthened," and added that "the FSA plans to submit a related bill to amend the law to the regular Diet session next year."