TL;DR:
- Japan’s FSA proposes a rule to separate customer and company assets on crypto platforms.
- Custodians must disclose storage practices and hold fiat in trust accounts.
- The measure strengthens Japan’s stance on investor protection and market transparency.
Japan’s Financial Services Agency (FSA) is advancing a new rule requiring crypto platforms to hold customer assets separately from company funds. The proposal, aimed at preventing misuse and improving consumer protection, builds on Japan’s already strict regulatory framework following past exchange collapses. Under the draft regulation, platforms must store client-held crypto and fiat funds in segregated accounts, making it harder for firms to use customer assets for their own operations. The FSA’s move underscores Japan’s intent to strengthen investor safeguards in the digital asset sector.
Officials noted that the measure comes amid global efforts to establish clearer governance for crypto custody, as several countries examine similar frameworks. In Japan’s case, the rule would likely require custodians to disclose how they store and manage users’ assets, introducing new transparency standards. The proposed structure reflects a desire to enhance accountability after high-profile failures that shook market confidence. The FSA is expected to solicit industry feedback before finalizing the rule, ensuring compliance from domestic exchanges and foreign firms operating in Japan.
The custody requirement could reshape how exchanges handle crypto and fiat operations
If approved, the regulation would also impact how exchanges maintain fiat reserves. The FSA plans to mandate that customer cash be held in trust accounts, separate from business funds, to prevent liquidity risks during crises. This mirrors existing rules for securities firms and signals an effort to align crypto with traditional finance standards. Experts suggest the rule could make Japan a model for balancing innovation with investor security.
Japan’s consistent emphasis on oversight contrasts with recent failures in unregulated markets elsewhere. By tightening custody rules, the government aims to reinforce its reputation as one of the world’s safest crypto jurisdictions, where strong compliance fosters long-term trust between platforms and users.
