Japan Plans to Ban Banks and Insurance Companies from Selling Cryptocurrencies, Securities Firms May Be Permitted

Jinse Finance reported that the Financial Services Agency of Japan is advancing a regulatory proposal for financial products, intending to prohibit banks and insurance companies from selling virtual currencies, while allowing securities firms and similar institutions to conduct virtual currency sales. Previously, the Financial Services Agency of Japan had already regarded virtual currencies as investment targets and has been exploring regulatory measures under the Financial Instruments and Exchange Act. The agency believes that virtual currency prices are highly volatile and there is a risk of asset leakage due to cyberattacks, thus it is necessary to protect the interests of depositors and insurance policyholders. However, given that internet securities firms and other institutions are already engaged in virtual currency sales, from the perspective of fair competition, the Financial Services Agency of Japan has preliminarily decided to allow securities subsidiaries under banks or insurance companies to sell virtual currencies. The report also pointed out that "it is expected that only after risk management measures are fully established will the Financial Services Agency of Japan possibly approve banks or insurance companies to hold and operate virtual currencies." The Financial Services Agency of Japan plans to submit relevant legal amendments at next year's regular session of the National Diet.