Japan Aims to Set Global Crypto Standard with Mandatory Exchange Reserves

Japan is positioning itself as a leader in cryptocurrency regulation with a plan to mandate that all local exchanges hold capital reserves to protect investors.

The Financial Services Agency (FSA) will legislate this requirement, creating a financial safety net for users in case of exchange insolvency due to hacks.

Scheduled for submission to parliament next year, the bill would close a significant regulatory loophole. While Japan already enforces cold storage of assets, it lacks a mechanism to ensure customers are compensated after a loss.

This proactive step, alongside plans to register third-party custodians, is designed to build a more resilient and trustworthy crypto market. The regulatory push gained urgency after the $312 million DMM Bitcoin exploit, which originated from a weakness at an external software firm, Ginco.