"Japan is preparing another major tightening of its digital-asset rulebook, with the Financial Services Agency (FSA) planning to require crypto exchanges to set aside liability reserves to compensate customers in the event of hacks, operational failures, or bankruptcies, according to reporting from Nikkei. The proposal marks a shift in how Japan views the risks attached to digital-asset custody. Exchanges are already required to store customer crypto in cold wallets - a measure meant to reduce the chance of theft because the assets are kept offline."
"Regulators now see that gap as unacceptable, particularly after repeated high-profile breaches. The FSA aims to submit legislation to parliament in 2026. If passed, exchanges would need to build reserve balances similar to those maintained by traditional securities firms, which typically set aside between ¥2 billion and ¥40 billion depending on trading volumes. Those benchmarks, along with the history of crypto-asset leaks, will guide the FSA in determining appropriate thresholds for digital-asset platforms."
Japan's Financial Services Agency plans to require crypto exchanges to hold liability reserves to compensate customers for losses from hacks, operational failures, or bankruptcies. Exchanges currently must use cold wallets, but no statutory obligation exists to fund customer reimbursements if those safeguards fail. The FSA intends to submit legislation to parliament in 2026 that would require reserve balances comparable to traditional securities firms, typically between ¥2 billion and ¥40 billion depending on trading volumes. The proposal may allow part of the requirement to be met through insurance, following similar EU and Hong Kong measures. Recent large breaches reinforced the need for stronger custody and capital safeguards.
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