Japan is in its new era of “firsts”. They have a new Prime Minister as of the 21st of October 2025, the first woman to ever step in to the hotseat. And, we can add to the list of firsts, that Japan is on the verge of allowing banks to buy and hold crypto assets like Bitcoin. Japan’s financial regulator, the Financial Services Agency (FSA), is preparing a rule change that is keeping crypto enthusiasts on the edge of their moon boots.

Previously, banks in Japan could not hold crypto assets due to concerns around volatility and risk. But if this rule change spins in like a sushi roll, banks will be able to treat cryptocurrencies more like other investment assets like stocks or bonds. In fact, some commentators are even claiming that Japanese banks are already quietly accumulating cryptocurrencies.

Does this mean we can say “konnichiwa” to upward price pressure? 

It’s hard to say. While this could be potentially upward price pressure for Bitcoin, let’s not get high on the Hopium just yet.

There are many other macroeconomic factors that can cause price falls that override institutional accumulation rather swiftly and cruelly.

And, the new rule might be shot down like a UFO over Area 51. So let’s just see the lay of the land before we start rolling around on a bed full of Bitcoin.

Is Bitcoin now Legit?

There is hope for a wider benefit of this new rule (if it passes). Japan is a major economy. If the Japanese banks hold Bitcoin, it could mean that Bitcoin is becoming a mainstream asset rather than just a speculative niche. 

It seems like the crypto ecosystem is evolving and being embedded into traditional finance. This could be a structural tailwind rather than a short-term fad.

Will Institutional Demand Drive up Price?

When a country’s banks are allowed to hold Bitcoin, it opens a new demand channel. Up until now, many banks have been restricted from owning crypto assets (directly) because of regulation, governance or risk frameworks. If Japanese banks can buy and store Bitcoin, that effectively means more potential capital flowing into the crypto market.

It is conceivable that if banks buy and hold, more Bitcoin may be locked up and not circulating actively. This will reduce “liquid supply.” 

Unlike fiat currencies (government-issued money), no one can “print more” Bitcoin, the supply is fixed. There will never be more than 21 million in circulation. This could create scarcity in Bitcoin available to purchase.

Ripple Effect Globally

If Japan allows banks to hold Bitcoin, other countries might fall in line too. The great hope for Bitcoin holders is that this could create a self-reinforcing trend of institutional adoption. 

This may reduce perceived risk, attracting more capital (from other banks, asset managers, pension funds). There could be other layers of demand.

Retail Demand

If Japanese banks are allowed to offer crypto services, it could be a big deal not just for big investors, but also for individual buyers. If banks add crypto buying and selling to their normal apps, people could buy Bitcoin and other coins straight from the bank they already use. This would make it much more convenient for normies to get into crypto. It is not a huge leap to think that this could bring more people into the market.

What to Watch For

Here are some factors to keep in your sights:

An official announcement from the FSA or Japanese government that banks will be allowed to hold crypto.Timing: When would the rule go into effect? Is it immediate, or phased?Flow data: Is there evidence of banks accumulating Bitcoin (on-chain large wallet movements, disclosures, etc.)?Supply metrics: Are there reductions in Bitcoin available for trading (more coins being locked, less selling)?

Yes, But…

Japan allowing banks to buy and store Bitcoin would open a big institutional demand channel. But we don’t know how the markets will react. It could end up being a total nothingburger. Without sauce. Ew. 

And yet, it does seem promising. Japanese banks will be able to hold Bitcoin themselves, as well as provide custody services for their customers. And anyone who is a crypto bro or sis knows that this could mean more institutional accumulation. 

Maybe we CAN suck in a little Hopium while keeping a good dose of Copium in a warm glass nearby. 

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Filed under: Bitcoin - @ October 22, 2025 12:13 am