Japan’s Financial Services Agency (FSA) is considering reforms that would allow banks to acquire and hold digital assets such as Bitcoin for investment purposes, according to a report in the Japanese newspaper Yomiuri.
The system will allow banks to trade cryptocurrencies in the same way as stocks and government bonds, with certain regulations in place to ensure financial stability.
The Financial Services Agency is also considering registering banking groups as “virtual currency exchange operators” to enable them to provide trading and exchange services, with the aim of making the investment process easier through the involvement of trusted banking groups.
A nearby working group meeting of the Prime Minister’s advisory body, the Financial Services Council, is expected to discuss the new reforms.
The plan coincides with the growing adoption of digital assets around the world, including in the United States, and marks a shift from 2020 guidelines that prohibited local banks from acquiring cryptocurrencies for investment purposes.
Japan’s increasing openness to cryptocurrencies comes at a critical time as the country faces an unusually high debt-to-GDP ratio of 240%.
This unsustainable debt level is expected to lead to financial restraint measures such as low interest rates, high inflation, and increased regulation to manage the debt burden. In this context, cryptocurrencies could emerge as an attractive escape valve for investors seeking an alternative to the traditional financial system.
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