Japan is preparing a new layer of protection for crypto investors, aiming to ensure that customer funds can be recovered even if an exchange is hacked or collapses.
A new safety buffer for customer assets
The Financial Services Agency (FSA) is developing a reserve framework that would require exchanges to set aside dedicated capital to cover potential losses, according to reporting from Nikkei.
Japan already obliges crypto exchanges to keep most customer coins in cold storage, the industry’s common defense against theft. But under current rules, a platform that follows custody standards does not need to maintain a separate reserve to compensate users if an incident occurs.
That gap became harder to ignore after several major breaches rattled the industry.
The FSA now plans to ask parliament in 2026 for legal authority to introduce liability reserves. The idea borrows from the securities sector, where brokers maintain pools of capital to cover losses linked to errors or misconduct. Large Japanese securities firms typically hold between 2 billion and 40 billion yen in reserves, with exact levels tied to trading volume and risk exposure.
Regulators intend to use that structure as a blueprint for crypto, though the final requirements will incorporate lessons from past digital-asset cases. To ease the financial burden, the FSA is considering a hybrid approach that allows exchanges to meet part of the requirement through insurance.
This would blend capital buffers with risk transfer, rather than forcing platforms to shoulder all potential losses on their balance sheets.
According to the Nikkei, Japan’s Financial Services Agency plans to require crypto asset exchanges to establish mandatory reserve funds to cover losses from unauthorized access or other asset outflow incidents, ensuring rapid compensation for customers. The Financial System…
— Wu Blockchain (@WuBlockchain) November 24, 2025
Japan already requires customer assets to be segregated from company funds.
Under the new plan, an independent administrator, such as a court-appointed attorney, would have clearer authority to return segregated assets to users when a platform loses operational control or enters bankruptcy.
Mega-Hacks renew pressure on policymakers
The urgency behind the FSA’s work is shaped by recent high-profile losses. In May 2024, DMM Bitcoin disclosed that attackers stole roughly 48.2 billion yen worth of Bitcoin. Bybit revealed in February 2025 that hackers had taken about $1.46 billion in digital assets.
Episodes of that size have reinforced Tokyo’s concern that cold-wallet requirements, while useful, are not impenetrable.
Other global financial hubs have reached similar conclusions. The EU’s MiCA rulebook obliges crypto service providers to maintain capital and insurance to protect customer assets. Hong Kong requires licensed exchanges to secure compensation funds through insurance or dedicated deposits. Japan’s plan would bring its own rules closer to those approaches without copying them wholesale.
A market growing into a new regulatory identity
Japan’s crypto regime has been evolving for years as digital assets shift from niche payments technology to investment products. Regulators are weighing whether parts of the market should be covered under the Financial Instruments and Exchange Act, which governs securities and derivatives and includes insider-trading rules.
Local media, including the Asahi Shimbun, report that policymakers are exploring tax adjustments to encourage onshore participation and clearer definitions of which tokens count as financial products.
At the same time, the Japan Exchange Group is evaluating stricter disclosure and audit expectations for listed companies that hold large crypto treasuries, after several firms recorded heavy losses during speculative waves.
Maryna Hornieieva
Disclaimer: All materials on this site are for informational purposes only. None of the material should be interpreted as investment advice. Please note that despite the nature of much of the material created and hosted on this website, HODL FM is not a financial reference resource, and the opinions of authors and other contributors are their own and should not be taken as financial advice. If you require advice. HODL FM strongly recommends contacting a qualified industry professional.
