Japan is considering allowing local banks to buy and sell cryptocurrencies

On October 20th, multiple local media outlets in Japan reported that the Financial Services Agency (FSA) is considering allowing domestic banks to trade and hold cryptocurrencies.

Currently, due to the high volatility of cryptocurrency prices, Japanese regulatory guidelines prohibit banks from holding such digital assets. The FSA plans to review this current policy and explore possible reforms.

The goal of this policy adjustment is to establish a mechanism that will allow banks to trade cryptocurrencies in the same way they trade stocks and government bonds. Reports indicate that the FSA will also develop accompanying regulatory measures to mitigate the financial risks associated with the policy changes.

The reform proposal is expected to be discussed at an upcoming meeting of the Financial Services Council, an advisory body to the Japanese Prime Minister. Furthermore, the FSA is also exploring the possibility of allowing banks to register as cryptocurrency trading platforms, thereby facilitating retail investors' participation in the crypto market through trusted banking channels.

The FSA is also working to improve fairness in the digital asset trading market. Reportedly, the agency plans to submit a draft amendment to explicitly prohibit trading using non-public information, with violators facing financial penalties commensurate with their illegal gains.