The post Japan Mulling New Rules For Crypto Custodians And Service Providers appeared on BitcoinEthereumNews.com.

Japan’s Financial Services Agency (FSA) is planning new rules to tighten oversight of digital asset infrastructure by proposing new registration rules for crypto custodians and trading services providers. The new registration rules will require crypto firms to register with regulators before working with cryptocurrency exchanges. Japan’s FSA Proposes New Framework Japan’s Financial Services Agency (FSA) is proposing a regulatory framework that requires digital asset custodians to register with regulators before providing services to cryptocurrency exchanges. The proposal aims to prevent security breaches like the DMM Bitcoin hack. Exchanges will also be required to use only the systems developed by the registered entities. Japan’s current regulatory framework requires cryptocurrency exchanges to comply with strict requirements to safeguard deposits. This includes storing client assets in cold wallets. However, external service providers have been given a far more lenient approach. Regulators believe this has created a security gap, putting exchanges at risk of hacks. The problem was amplified after the DMM Bitcoin hack in 2024. The hack was one of Japan’s largest crypto thefts, with 48.2 billion yen ($312 million) worth of BTC stolen. Authorities ultimately traced the breach to Ginco, a Tokyo-based software firm managing DMM’s trading systems. This highlighted the weaknesses in outsourced services that could put cryptocurrency platforms at greater risk. Broad Support According to sources, a significant majority of the FSA’s working group supports the new registration system, emphasizing the need for clear regulations to support the country’s growing crypto ecosystem. The FSA will compile a formal report and submit the proposed amendments to the Financial Instruments and Exchange Act during the 2026 ordinary Diet session. The move comes as regulators increase efforts to maintain a delicate balance between innovation and investor protection. The FSA recently approved Japan’s first yen-backed stablecoin, the JYPC, and also confirmed plans to support…

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Filed under: News - @ November 14, 2025 1:34 am