Japan’s Financial Services Agency (FSA) is considering a reform that would allow banks to acquire and hold digital assets such as bitcoin for investment purposes, according to a report by Japanese newspaper Yomiuri.
The system will allow banks to trade cryptocurrencies in the same way as stocks and government bonds, while implementing certain rules to ensure their financial stability.
The FSA is also considering registering banking groups as “cryptocurrency exchange operators”, enabling them to offer trading and exchange services, a move aimed at easing the investment process by involving credible banking groups.
The upcoming working group meeting of the Financial Services Council, an advisory body to the Prime Minister, is to discuss the new reform.
The plan is in line with the growing adoption of digital assets worldwide, including the United States, and marks a shift away from the 2020 policy that prevented local banks from acquiring cryptocurrencies for investment purposes.
Japan’s growing openness to cryptocurrencies comes at a critical time as the country struggles with an unusually high debt-to-GDP ratio of 240%.
This unsustainable level of debt is expected to prompt financial repression measures, such as low interest rates, high inflation and increased regulation, to deal with the debt burden. In this context, cryptocurrencies can emerge as attractive escape valves for investors seeking alternatives to traditional financial systems.
