Japan’s Financial Services Agency (FSA) is considering introducing a prior notification system for companies that provide systems to manage crypto assets.
The proposal was discussed on 7 November by a working group of the Financial System Council, an advisory body to the Prime Minister.
The move aims to strengthen measures to ensure system stability following a series of crypto asset thefts.
According to Nikkei, current regulations require crypto exchange operators to implement proper management systems, such as storing customer assets in “cold wallets” that are not connected to the internet.
However, system providers themselves are not currently subject to direct regulation.
Under the proposed framework, only systems from registered providers would be permitted for use.
The reform follows incidents such as the 2024 theft of ¥48.2 billion worth of Bitcoin from DMM Bitcoin.
The company had outsourced transaction management to Tokyo-based software firm Ginco, whose system was infiltrated by a hacker group.
Many council members expressed support for the new approach, noting that outsourcing limits the accountability of exchange operators and highlighting the need to clarify what additional measures should be required.
The FSA will compile a report based on these discussions, with plans to submit a bill to amend the Financial Instruments and Exchange Act to the ordinary Diet session in 2026.
Featured image credit: Edited by Fintech News Hong Kong, based on image by hamzaazeem1387 via Freepik