Japan mulls new rule limiting crypto custody to registered providers: report

Japan's Financial Services Agency (FSA) is considering implementing a new system that would mandate that third-party digital asset custodians and trading management services register with authorities before serving crypto exchanges. This proposal, discussed by an advisory working group, aims to close security gaps, especially following the 2024 DMM Bitcoin hacking incident where outsourced trading management was exploited. Under the potential new rule, exchanges would only be permitted to use systems provided by these officially registered custodians. The FSA plans to compile a report soon and intends to submit amendments to the Financial Instruments and Exchange Act during the 2026 ordinary Diet session.

(Source：The Block)