Japan’s FSA Introduces Reserve Fund Mandate for Crypto Exchanges
Japan's Financial Services Agency is tightening oversight of cryptocurrency exchanges with new reserve requirements. Exchanges must now maintain compensation funds to shield traders from losses tied to hacks or operational failures—a move mirroring safeguards in traditional securities markets.
The reserve thresholds will scale with trading volumes and security histories, creating a financial backstop absent in many jurisdictions. While the policy may increase operational costs, it signals Japan's commitment to legitimizing crypto markets through investor protections.
This regulatory shift comes as global authorities grapple with balancing innovation against consumer risks. By implementing insurance-like mechanisms, Japan positions itself as a leader in institutional-grade crypto infrastructure—potentially attracting more conservative capital to digital assets.
