Japan Weighs New Rules Requiring Crypto Custodians to Register With Authorities

Japan’s Financial Services Agency (FSA) is considering tighter regulations for companies that hold or manage digital assets, aiming to close security gaps in the country’s cryptocurrency sector.

According to a recent Nikkei report, a working group under the Financial System Council — an advisory body to the Prime Minister — discussed on November 7 the possibility of requiring crypto custody and trading management providers to register with the FSA before serving exchanges.

仮想通貨のシステム業者、事前届け出制を導入へ　金融審で議論 - 日本経済新聞

金融庁は暗号資産（仮想通貨）の管理システムを提供する業者に、事前の届け出制を導入する検討に入った。金融審議会（首相の諮問機関）の作業部会で7日に議論した。一連の仮想通貨の不正流出事件を受け、システムの安定確保へ対応を強化する。現行法令は、顧客の仮想通貨をインターネットに接続しない「コールドウォレット」で管理するなど交換業者に管理体制の整備を求めている。システムを提供する会社に直接的な規制を課し

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Currently, Japan’s crypto exchanges are obligated to implement strict asset management measures, such as storing user funds in cold wallets. However, no comparable rules exist for third-party service providers that work with these exchanges. This regulatory gap came under scrutiny following several high-profile security breaches.

One notable case was the 2024 DMM Bitcoin hack, where approximately 48.2 billion yen ($312 million) in bitcoin was stolen. Investigations revealed that the breach originated from a system managed by Tokyo-based software firm Ginco, which had been contracted by DMM for trading operations.

To prevent similar incidents, the FSA intends to require that crypto exchanges only use systems and services provided by officially registered custodians. The goal is to strengthen accountability and minimize risks related to system vulnerabilities or external contractors.

Most members of the Financial System Council reportedly support the proposal, emphasizing the need for clearer and more comprehensive rules around digital asset management. The FSA is expected to compile its findings into a formal report soon and submit proposed amendments to the Financial Instruments and Exchange Act during the 2026 ordinary Diet session.

At the same time, Japan continues to advance its stablecoin ecosystem. In October, the FSA approved the country’s first yen-backed stablecoin, JPYC, which has already launched. More recently, the agency announced support for a pilot program involving Japan’s three major banks — Mizuho, MUFG, and SMBC — to explore the use of regulated stablecoins for digital payments and settlements.

With these moves, Japan is signaling a dual commitment: tightening oversight to ensure security and compliance, while fostering innovation in its growing digital asset landscape.