Japan’s Financial Services Agency (FSA) is considering a reform that would allow banks to acquire and hold digital assets like Bitcoin for investment purposes, according to a report by Japanese newspaper Yomiuri.
This system will allow banks to trade cryptocurrencies in the same way as stocks and government bonds, while imposing certain rules to ensure their financial stability.
The FSA is also considering registering banking groups as “cryptocurrency exchange operators,” enabling them to provide trading and exchange services, a move that aims to ease the investment process by including trusted banking groups.
The upcoming working group meeting of the Financial Services Council, the prime minister’s advisory body, is set to discuss the new reform.
The plan is in line with the growing acceptance of digital assets around the world, including the US, and marks a change from 2020 guidance that barred local banks from acquiring cryptocurrencies for investment purposes.
Japan’s increasing openness towards cryptocurrencies comes at a critical time as the country grapples with an exceptionally high debt-to-GDP ratio of 240%.
This unsustainable debt level is expected to prompt financial repression measures such as low interest rates, higher inflation and increased regulation to manage the debt burden. In this context, cryptocurrencies could emerge as an attractive escape valve for investors looking for alternatives to traditional financial systems.