Could Japan Allow Banks to Invest in Crypto?

TL;DR: Japan’s Financial Services Agency (FSA) is considering allowing banks to invest in and hold cryptocurrencies like Bitcoin under strict risk management – a huge shift from long-standing rules. For companies seeking funding, this could unlock fresh pools of institutional capital, new partnerships, and lower barriers to scaling.

What’s shifting: Japan’s banks may invest in cryptocurrencies

Under current rules (set in 2020), Japanese banks are not allowed to hold or invest directly in crypto assets due to concerns over price swings and volatility. Japan May Let Banks Hold Crypto Under New FSA Proposal
The FSA is now reviewing regulatory changes that would let banks purchase and hold crypto. This includes putting in place capital requirements and risk-controls to prevent exposure that threatens financial stability. Japan May Let Banks Hold Crypto Under New FSA Proposal
The proposed reforms could also let banking groups register crypto exchange subsidiaries and operate trading/custody services. That’s a potential game-changer in how financial institutions participate in digital asset markets. Japan May Let Banks Hold Crypto Under New FSA Proposal

How this could reshape the funding landscape for companies

More institutional investors: When banks start investing in crypto, expect capital from large financial institutions to flow into projects and startups focused on Web3, DeFi, stablecoins, blockchain infrastructure.
Better liquidity for tokenized projects: Crypto-friendly banks could provide more support for token offerings, secondary markets, or even collateralized lending using crypto. That lowers the cost of capital.
Enhanced partnerships: Banks may want to partner with tech or fintech startups that offer strong risk management, custody, or regulatory compliance. These collaborations could lead to joint ventures or investment in startups.
Regulatory clarity reduces risk for funders: For companies raising funds, being compliant with crypto regulations becomes more credible. Funders demand less “regulatory risk” as crypto gets integrated into standard banking oversight.

Real-world examples and what business leaders are already doing

Nomura Holdings is preparing to apply for a license to offer crypto trading services to institutions, showing firms want to be ready if regulations loosen. Nomura Holdings Preparing to Apply for a License to Offer Crypto Trading Services to Institutions
Daiwa Securities Group is offering branches where clients can borrow yen using Bitcoin and Ether as collateral. That shows demand for leveraging crypto in financial operations. Daiwa Securities Group Offering Branches Where Clients Can Borrow Yen Using Bitcoin and Ether as Collateral
The big three Japanese banks – MUFG, SMBC, and Mizuho – are developing a stablecoin pegged to the yen to make corporate settlements faster and cheaper. Japan Plans to Allow Banks to Trade Bitcoin and Other Crypto

What companies seeking funding should do now

Be ready with compliance and transparency

Investors will want tight risk disclosures, solid governance, and clear custody solutions. If your startup is crypto-native, show you already meet or can meet banking-grade risk-management standards.

Design token models with legal and regulatory frameworks in mind

If your project issues tokens or crypto-assets, align them with securities law or frameworks like Japan’s Financial Instruments and Exchange Act (FIEA). That helps avoid classification surprises. Crypto Regulations in Japan

Engage with banks and financial firms proactively

Pitch them infrastructure roles – custody, wallet security, auditing, settlements. If banks are going to hold crypto, they’ll need technology and services, especially from startups.

Monitor regulatory timing

Proposals are being discussed now. Legislative changes may take shape as early as 2026. That means you’ve got a window here to position yourself. Japan to Give Crypto Assets Legal Status in Financial Products, Nikkei Says

Potential pitfalls to watch closely

Volatility could still hurt banks’ balance sheets if safeguards are weak.
Tax rules may lag regulatory change. Japan currently taxes crypto gains heavily, so profits from holdings or trades may not be immediately favorable. Tax rules may lag regulatory change
Until new laws are in force, there’s uncertainty and potential backlash from conservative institutions or regulators.

FAQ-Style Questions for clarity

Q: When might these changes take effect in Japan?
A: Legislative amendments like reclassifying crypto under the FIEA are expected by early 2026, according to several reports. Reuters: Japan to give crypto assets legal status in financial products, Nikkei says

Q: Which cryptos will banks be able to hold or trade?
A: Likely the major ones like Bitcoin and Ethereum initially. Projects may be assessed case by case, especially in terms of liquidity and volatility. Japan May Let Banks Hold Crypto Under New FSA Proposal

Q: Will banks be able to sell crypto directly to retail customers?
A: The proposals suggest retail access may be more restricted. Banks might handle institutional clients first, or via licensed exchanges or subsidiaries. Japan Times: FSA Banks Crypto

Q: How does this compare with other countries?
A: Some global banks have already begun offering crypto trading (Standard Chartered, for example) and other markets are expanding ETFs and tokenized products. Japan seems to be catching up while building stronger legal guardrails. FT: Global banks offering crypto trading; Japan catching up

If you’re part of a startup or company seeking funding, this moment presents both risk — and massive opportunity. Align with regulatory trends, build with transparency, and position yourself as a trusted partner for banks venturing into crypto. If you want help mapping this to your product roadmap or funding pitch, I’d be happy to work that through with you.