Japan Tightens Crypto Regulations with Capital Reserve Requirements
Japan's Financial Services Agency (FSA) is implementing new capital requirements for cryptocurrency exchanges, mirroring traditional financial safeguards. The rules mandate exchanges to maintain dedicated reserves capable of covering losses from security breaches, operational failures, or misconduct.
The regulatory push follows high-profile failures including the 2014 Mt. Gox collapse and the recent $300 million DMM Bitcoin breach. These incidents exposed critical vulnerabilities in exchange governance, prompting demands for stronger protections.
By requiring crypto platforms to maintain financial cushions similar to banks, Japan aims to create a more stable market environment. The reserves are designed to ensure exchanges remain solvent during crises, protecting everyday users from catastrophic losses.
