New Rules Aim to Protect Customer Funds from Hacks and Failures

Japanese regulators are preparing to introduce stronger investor protections for the digital asset market by requiring cryptocurrency exchanges to hold dedicated liability reserves. According to a report from Nikkei, the new rules are designed to ensure users can be compensated if their funds are lost due to hacks or other platform failures.

Japan’s Financial Services Agency (FSA) plans to submit a bill to parliament in 2026 to enact the changes. This move would extend a framework long-established in traditional securities markets to the country’s crypto industry, reinforcing its position as one of the world’s most heavily regulated digital asset environments.

While Japan already mandates that exchanges store the majority of customer assets in more secure offline cold wallets, the current system has a notable gap. Platforms that comply with these custody rules are not required to set aside specific corporate reserves to cover potential losses. The proposed legislation aims to close this loophole, adding a critical layer of financial security for investors in the event of an exchange collapse or a major security breach.