Japan Plans New Law Requiring Crypto Exchanges to Hold Reserve Funds for Customer Protection

Highlights:

• Japan plans a new law requiring crypto exchanges to hold reserve funds.
• Rules will ensure customer assets are returned safely if exchanges go bankrupt.
• Major hacks like Mt. Gox and DMM Bitcoin push for stronger protections in Japan.

Japan is moving toward stricter rules for its crypto market. The Financial Services Agency (FSA) plans a law that will require exchanges to keep reserve funds. This will protect customers from losses caused by hacks or security breaches. The Nikkei reported the law could go to parliament in 2026. It will follow a system like traditional securities firms, which hold reserves from $12.7 million to $255 million depending on trading size. Crypto exchanges will no longer be allowed to rely only on offline cold wallets.

UPDATE 🚨

Japan just made it mandatory for crypto exchanges to keep emergency cash reserves!

If an exchange fails or gets hacked, customer funds stay safe! pic.twitter.com/upjd6kdGSt

— That Martini Guy ₿ (@MartiniGuyYT) November 25, 2025

Japan Tightens Rules After Crypto Hacks

The new rules would also set clear steps for returning assets during bankruptcy. Court-appointed administrators could handle payouts to users, protecting customers even if an exchange goes insolvent. This comes after several major security breaches in Japan. In 2014, the Mt. Gox collapse saw hackers steal 850,000 Bitcoin, and repayments are still ongoing until October 2026. 

In May, DMM Bitcoin lost 4,502 Bitcoin because of a North Korea-linked hack at Ginco, the wallet provider for DMM transactions. Last month, around $21 million in cryptocurrency was stolen from SBI Crypto, a mining pool run by SBI Group. Blockchain investigators said the stolen funds may have been laundered through Tornado Cash, possibly involving North Korea.

Chainalysis, a blockchain analytics firm, said the Asia-Pacific region was second in the world for crypto thefts in mid-2025. Japan, Indonesia, and South Korea had the most victims. Crypto exchanges may soon need both mandatory reserves and security disclosures. 

Other parts of the world are making similar changes. In the European Union, crypto firms must keep set capital levels and use insurance to safeguard customer funds under the MiCA framework. Hong Kong also requires licensed exchanges to secure protection funds through insurance and deposits. Japan’s move to create clear liability reserves would place its rules closer to these international standards.

Japan Updates Rules and Supports New Products

Japan is also changing its rules for digital assets to make crypto safer and easier to understand. The Financial Services Agency may put cryptocurrencies under the Financial Instruments and Exchange Act instead of the Payment Services Act. This will treat crypto like regular financial products and cut taxes on gains to a flat 20%, the same as stocks and bonds.

Local companies are reacting to these changes by exploring new products and growth opportunities. According to a Monday Nikkei report, six of Japan’s largest wealth managers, including Mitsubishi UFJ Asset Management and Daiwa Asset Management, are preparing the country’s first crypto investment trusts. 

JUST IN: 🇯🇵 Japan’s largest asset managers including Nomura are planning to launch #Bitcoin and crypto investment products.

Asia is coming 🚀 pic.twitter.com/5pbsYbNjol

— Bitcoin Magazine (@BitcoinMagazine) November 24, 2025

Japan is also supporting stablecoins. Three big banks are working on a yen-backed stablecoin, which shows that the country sees them as part of its long-term financial plans.