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 regulations to ensure their financial stability.
The FSA is also considering registering banking groups as “cryptocurrency exchange operators”, allowing them to offer trading and exchange services, a move aimed at facilitating the investment process by involving credible banking groups.
The imminent meeting of the working group of the Financial Services Council, an advisory body to the Prime Minister, will discuss the new reform.
The plan is consistent with the growing adoption of digital assets around the world, including the United States, and marks a departure from the 2020 guideline that prohibited local banks from acquiring cryptocurrencies for investment purposes.
Japan’s growing openness to cryptocurrencies comes at a critical time, as the country faces an exceptionally high debt-to-GDP ratio of 240%.
This level of unsustainable debt is expected to drive financial repression measures, such as low interest rates, high inflation and increased regulation, to manage the debt burden. In this context, cryptocurrencies could emerge as attractive escape valves for investors looking for alternatives to traditional financial systems.
