Japan Moves to Mandate Liability Reserves for Crypto Exchanges

Japan's Financial Services Agency (FSA) is introducing significant regulatory changes, mandating that registered cryptocurrency exchanges maintain dedicated "liability reserves" by December 9, 2025, to compensate customers following security breaches like hacks or unauthorized transfers. This move aims to close a critical protection gap, as existing safeguards like cold storage proved insufficient after incidents like the Mt. Gox hack and the recent DMM Bitcoin theft. The required reserve size will be benchmarked against standards for Japan's securities industry, though smaller operators might be allowed to meet requirements through approved insurance policies. This reserve mandate is part of a broader regulatory overhaul that also includes registering third-party providers and tightening rules for certain cryptocurrencies, all intended to boost customer protection, restore market trust, and align crypto standards closer to traditional finance.

(Source：Cointelegraph)