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Japan weighs tighter crypto custody, trading rules: report
Japan’s Financial Services Agency (FSA) is considering new rules that would require cryptocurrency custody and trading management providers to register with authorities before serving exchanges.
A working group under the Financial System Council, an advisory body to the Japanese Prime Minister, discussed the proposal on November 7, according to Nikkei.
Current rules mandate that exchanges keep user assets secure, but there are no similar requirements for third-party service providers.
The proposed system would also require exchanges to use only services from registered providers, aiming to close security gaps that could lead to theft or system failures.
The discussion follows the 2024 DMM Bitcoin hack, where about 48.2 billion yen (US$312 million) in bitcoins was stolen, reportedly through a third-party software provider.
Most working group members supported the move and called for clearer digital asset regulations.
The FSA expects to submit law amendments to Japan’s parliament in 2026.
The agency recently approved the country’s first yen-pegged stablecoin, JPYC, and is backing a stablecoin pilot with major local banks.
🔗 Source: The Block
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Japan plan would register custody and trading management providers. Scope for other vendors and foreign firms remains unclear
- The FSA proposed tighter rules for crypto lending. The plan may bring these firms under the Financial Instruments and Exchange Act (Japan’s securities law). It adds risk controls for sub-lenders (firms that re-lend customer assets) as well as staking contractors (providers that lock up tokens to help secure blockchains), requires safer asset storage, and mandates clearer risk disclosures 1.
- Officials proposed a vendor registry after the 2024 DMM Bitcoin theft of 48.2 billion yen, linked to a third-party software provider.
- As of August 2025, Japan has 26 registered crypto-asset exchange service providers and five financial instruments business operators for crypto transactions 2.
- The agency plans to submit law amendments to parliament in 2026.
If enacted, exchanges would have to use registered vendors. Scope, timelines, and foreign-provider treatment remain to be clarified
- Exchanges would need to use only registered custody and trading management vendors, so some may have to switch providers.
- The Japan Virtual and Crypto Assets Exchange Association (JVCEA), a self-regulatory group, launched a green list of pre-approved tokens in 2022 2. It aims to speed listings of common coins like Bitcoin, Ethereum.
- Regulators still need to define vendor scope, phase-in timing, and treatment of non Japan based providers that serve domestic exchanges.
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