Timber
Japan is tightening the rules for crypto exchanges, and it’s a move many people saw coming. After a long list of global hacks and exchange failures, regulators want stronger protections for everyday users.
Crypto exchanges in Japan may soon be required to maintain liability reserves to cover user losses.
Japan’s FSA Pushes for Stronger Protection
According to a new report from Nikkei, Japan’s Financial Services Agency (FSA) is preparing fresh rules. These rules would force crypto exchanges to maintain liability reserves. The aim is to ensure that exchanges compensate users for losses.
JAPAN FSA PLANS MANDATORY RESERVE FUNDS IN MAJOR CRYPTO OVERHAUL
– Japan’s Financial Services Agency (FSA) plans to require platforms to hold mandatory reserve funds to protect users from losses caused by hacks, fraud, or system failures.
A Push for Stronger Protection
– The… pic.twitter.com/dqvlmsrzXV
— BSCN (@BSCNews) November 25, 2025
The idea came from the Financial System Council, an advisory group that guides the FSA. They’re expected to release a report this week detailing how the reserves should work. The move also follows several high-profile international exchange hacks. Regulators in Japan don’t want to risk a similar blow to local users.
Crypto Exchanges Must Prepare for Reserved Funds
A key recommendation is that crypto exchanges must keep liability reserves to compensate users. These changes are part of a much greater effort. The FSA is reviewing rules to allow banks to hold previously restricted crypto. It shows that while Japan is cautious, it isn’t anti-crypto.
🇯🇵 NEW: Japan’s Financial Services Agency will require crypto exchanges to hold liability reserves to compensate users for hacks or security breaches, per Nikkei report. pic.twitter.com/vR1v18sifK
— Cointelegraph (@Cointelegraph) November 25, 2025
Japan has about 12 million registered crypto accounts, according to the FSA’s February data. With a national population of about 123 million, that’s a huge chunk of active or potential users. No wonder regulators want safety nets in place.
Japan’s Growing Stablecoin Ecosystem
Japan’s crypto overhaul isn’t limited to exchanges. A yen-pegged stablecoin finally launched in October through fintech company JPYC, backed 1:1 by bank deposits and government bonds. It came after years of regulatory adjustments. In 2022, Japan banned non-banks from issuing stablecoins, but the FSA has since softened its stance. It now expects the first fully approved yen stablecoin to arrive by 2026.
Japan’s first legally recognized yen stablecoin is JPYC.
And it’s powered by Avalanche. pic.twitter.com/Wxh9ryrlG9
— Avalanche🔺 (@avax) October 27, 2025
The big banks, such as Mitsubishi UFJ, Sumitomo Mitsui Banking Corp., and Mizuho Bank, already have plans to issue via their platform, Progmat. Monex Group is also considering a yen-supported token.
Conclusion
Japan’s need for crypto exchanges to hold liability reserves sends a clear message that user protection comes first. Japan is creating a safer, more mature crypto environment with stablecoins and updated banking rules. That security would be the difference for millions of Japanese crypto users.
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