Japan plans mandatory liability reserves for crypto exchanges to protect users
Japan’s Financial Services Agency (FSA) is preparing new rules that will require digital asset exchanges to maintain liability reserves, offering customers stronger protections in the event of hacks or other security breaches.
According to a report from The Nikkei on November 24th, the FSA intends to submit legislation to parliament in 2026 that would obligate crypto exchanges to set aside dedicated funds to compensate users for losses caused by “unauthorized outflows” of digital assets. This would apply even if the exchanges store customer assets in secure cold wallets—an area where no reserve requirements currently exist.
The size of the reserves is still being discussed, but the framework is expected to mirror the requirements imposed on traditional securities firms in Japan, which must hold between ¥2 billion and ¥40 billion ($12.7 million to $255 million) depending on their scale.
The proposal comes from ongoing work by a Financial System Council (FSC) working group. The FSC—an advisory body to the Prime Minister—has been reviewing Japan’s digital asset regulations and is preparing a comprehensive report. The liability reserve mandate will be one of its key recommendations.
These forthcoming rules appear aimed at rebuilding trust after several major hacks have shaken Japan’s crypto ecosystem. The most recent incident occurred in May 2024, when Japanese exchange DMM lost $305 million in a security breach. Japan also has a long history with high-profile exchange failures, most famously the 2014 Mt. Gox collapse following the theft of 800,000 BTC—an event that still affects creditors more than a decade later.
Japan also featured heavily in Chainalysis’ mid-year update to its 2025 crypto crime report. The firm noted that Japan ranks sixth globally in terms of total value stolen per victim, placing it among the countries most impacted by crypto-related theft.
To ease the transition, the FSA is considering letting exchanges purchase insurance as an alternative to holding the full reserve amount in cash. The goal is to balance consumer protection with a regulatory framework that crypto businesses can realistically comply with.
