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Japan's FSA Moves to Register Third-Party Crypto Custodians and System Providers

Regulators are preparing a 2026 Diet amendment following backing from a Financial System Council working group.

Overview

  • The plan would require third-party custody and trading system firms to register with the FSA before servicing crypto exchanges.
  • Exchanges would be limited to using systems built by registered providers, extending accountability to outsourced operations.
  • The push follows the 2024 DMM Bitcoin theft of ¥48.2 billion traced to vendor Ginco, which exposed oversight gaps in external systems.
  • Under current rules, exchanges face strict asset-safeguarding standards while outside service vendors face none, according to regulators.
  • The FSA plans to compile a formal report and seek changes to the Financial Instruments and Exchange Act in 2026 as it also advances JPYC approval and a multi-bank stablecoin pilot.