Japan's Financial Services Agency plans to require cryptocurrency exchanges to hold liability reserves to cover losses from hacking attacks or security breaches.

According to Nikkei, Japan's Financial Services Agency (FSA) is planning to require local cryptocurrency exchanges to establish reserves for liabilities in order to further strengthen investor protection in the cryptocurrency sector. Currently, Japan requires exchanges to store users' crypto assets in cold wallets, but does not mandate the maintenance of dedicated reserves for compensation in the event of losses such as hacking attacks or exploits. The FSA is seeking to require exchanges to manage liability reserves through legislation. Nikkei stated that the agency plans to submit the bill to the Diet next year (2026). Earlier this month, it was reported that the FSA also plans to implement a new system requiring local exchanges' third-party crypto asset custodians and trading partners to register with the authorities before providing services. This new requirement is also planned to be submitted to the regular Diet session in 2026. In 2024, the local cryptocurrency exchange DMM Bitcoin suffered a hack, resulting in losses of approximately $312 million. The hacker's entry point was identified as Ginco, a Tokyo-based software company that outsourced DMM's trading management.