The Financial Services Agency (FSA) has determined that, starting in 2026, all digital asset exchange platforms must maintain a specific liability reserve on their balance sheets. This new regulatory rule has the main objective of creating a robust prudential buffer that effectively protects customers against hacks, operational failures, or insolvencies. Thus, the Japanese regulator seeks to restore lost confidence in the sector following recent high-profile incidents that have undermined market security.
The obligation will be formalized through an amendment to the Financial Instruments and Exchange Act scheduled for 2026, elevating this measure from simple guidance to a strict legal requirement. Reserve amounts will not be fixed but will be calibrated according to liabilities, trading volume, and the operational risk profile of each platform. Illustrative figures cited by the regulator range from roughly 2 billion to 40 billion yen (approximately between 12.7 million and 255 million dollars), depending on the exchange’s scale. Additionally, a portion of approved insurance will be allowed to count toward the requirement, aligning oversight with practical risk-transfer tools.
Will these reserves guarantee total ecosystem stability against future collapses?
This policy marks a significant shift toward treating cryptocurrency trading platforms like traditional securities firms, subjecting them to much stricter financial instrument rules. The FSA frames this move as a necessary correction to repeated security failures, citing historical antecedents such as the Mt. Gox collapse in 2014. Likewise, the regulator is responding directly to the DMM Bitcoin hack in May 2024, which resulted in a massive loss of 48.2 billion yen, and a more recent theft of 1.46 billion dollars in February 2025.
On the other hand, the measure prioritizes a proactive accounting approach over current transparency mechanisms like Proof of Reserves (PoR). While PoR offers a snapshot of on-chain holdings, the new liability reserve allocates dedicated funds to cover specific future losses, emphasizing real financial preparedness over periodic attestations. The legal framework will also include stronger asset segregation rules and grant clear powers to court-appointed administrators, creating a more defined pathway for customer fund restitution in the event of bankruptcy.
These requirements are expected to trigger market consolidation, as higher operating costs could be unsustainable for smaller players. However, by allowing insured coverage, the aim is to balance investor protection with business viability, avoiding the risk of regulatory arbitrage toward laxer jurisdictions. The next verifiable milestone will be the approval of the amendment in 2026, at which point the Japanese crypto market will formally transition toward a more conventional regulatory model and safer environment.
