Japan’s financial watchdog signals plan to require liability reserves across crypto exchanges

Japan’s Financial Services Agency will mandate that crypto exchanges maintain liability reserves to protect customers against potential security breaches and operational risks, according to Nikkei.

The FSA, the country’s main financial services regulator, is implementing the reserve requirements as part of broader efforts to align virtual currencies more closely with traditional securities and promote safer market participation.

The new regulation focuses on ensuring exchanges are prepared to cover operational risks and safeguard customer funds. Asset managers in Japan are exploring new crypto investment products in anticipation of the regulatory changes, which could expand trading services and foster competition in the digital asset space.

The reserve mandate represents Japan’s continued efforts to strengthen consumer protection in the crypto sector while maintaining oversight of banking, securities, and emerging digital assets to ensure market stability.