Japan Moves to Mandate Reserves for Crypto Exchanges as Hacks Mount

Japan's Financial Services Agency (FSA) is planning legislation for 2026 that will mandate cryptocurrency exchanges to set aside liability reserves, similar to those held by securities firms, to cover customer losses from hacks or failures. While exchanges already use cold wallets, regulators see the lack of reserve funds as an unacceptable gap, especially after major incidents like the DMM Bitcoin hack in 2024. The FSA may allow exchanges to meet part of this requirement through insurance, mirroring policies in the EU and Hong Kong. Furthermore, the FSA is pursuing a broader regulatory overhaul, including stricter asset segregation, clearer rules for returning customer assets upon collapse, and potentially reclassifying crypto assets under the Financial Instruments and Exchange Act, which would impose stricter disclosure and insider-trading rules. These moves coincide with plans to lower the maximum crypto profit tax rate from 55% to a flat 20% to encourage institutional participation and accelerate Japan's Web3 push.

(Source：Bitcoin Magazine)