Japan Moves To Mandate Bank-Style Emergency Reserve Funds For Crypto Exchanges After Mt Gox Fiasco

[Ben Graham]

Given the ongoing volatility in the crypto world, Japan has prepared new regulations to protect investors. On 25 November 2025, Japan’s Financial Services Agency (FSA) revealed that it is implementing a new rule requiring crypto exchanges to maintain dedicated liability reserves. This fund will compensate users in the event of hacks, operational failures, or any such security incidents. Notably, the mandatory reserve requirements for the crypto exchanges will be based on trading volume and risk.

According to local media, the move follows years of security breaches on Japanese crypto platforms, especially the Mt Gox incident. Just last month, Japan’s defunct Bitcoin crypto exchange – Mt Gox- officially pushed back its creditor repayment deadline by yet another year. Nobuaki Kobayashi, the court-appointed rehabilitation trustee, confirmed that repayments (originally expected by 31 October 2025) will now be due by 31 October 2026.

Japan to require crypto exchanges to set aside liability reserves https://t.co/eSBfxFrG3X

— Nikkei Asia (@NikkeiAsia) November 24, 2025

 

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Mandatory Reserves Could Range From $12.7 Million To $255 Million

Given the new recommendations, the mandatory reserve funds of the crypto exchanges can range from  ¥2 billion to  ¥40 billion. This will of course depend on trading volume and risk exposure.

Furthermore, the FSA plans to submit the legislative amendment to parliament in 2026. This means, implementation will shortly follow approval in first half next year. 

Notably, the said crypto exchanges will be permitted to fulfill part of their reserve requirements through insurance coverage i.e. no large cash reserves but adequate user protection. 

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Japan’s FSA Advances Reforms That Would Permit Banks To Hold And Trade Bitcoin

Parallel to security upgrades, Japan’s FSA is advancing reforms that would permit banks to hold and trade digital assets like Bitcoin for the first time ever. 

Currently, the 2020 legislation prohibits banks from golding crypto. But could the shift happen sooner rather than later?

Japan’s cryptocurrency market continues to experience rapid growth – with over 12 million registered crypto accounts as of February 2025.

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Key Takeaways

Parallel to the security enhancements, the FSA is advancing reforms that would permit banks to hold and trade digital assets like Bitcoin for the first time.

Japan is

extending traditional financial market safeguards to digital assets while creating pathways for institutional participation. 

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