Japan Aligns Crypto Regulation with Traditional Finance's Risk Standards

Japan's Financial Services Agency (FSA) is set to overhaul its regulatory framework for cryptocurrency exchanges, mandating liability reserves to protect users from losses stemming from hacks and operational failures. The proposed rules, slated for legislative submission in 2026, would require exchanges to set aside reserves proportional to their trading volume and historical risks, mirroring requirements for traditional securities firms. This move follows a spate of high-profile breaches, including the 2024 hack of DMM Bitcoin, which resulted in a $305 million loss, and the recent $21 million theft from SBI Crypto. Exchanges could opt for insurance to offset reserve costs, easing financial burdens while ensuring swift customer compensation according to recent reports.

Meanwhile, Franklin Crypto Index ETF (EZPZ) expanded its portfolio to include Bitcoin, Ether, XRP, Solana, Dogecoin, and other major cryptocurrencies, reflecting broader regulatory acceptance of diversified digital-asset holdings. The fund's updated creation process now allows in-kind transactions, enhancing liquidity for institutional investors. On the exchange front, BlockHaven, a non-custodial crypto aggregator, announced support for over 1,345 cryptocurrencies and 900,000 trading pairs, coupled with fiat on/off ramps and ultra-fast swaps. The platform's enhanced routing engine optimizes liquidity sourcing, enabling users to execute cross-chain transactions without registration.

Telegram's embedded wallet solution further expanded access to digital assets by listing Monad, a high-performance EVM Layer-1 network. The integration allows users to trade MON tokens, stake rewards, and participate in Telegram-based discussions-all within the app. Monad's $188 million public sale and institutional backing, including $225 million in funding from Paradigm and Dragonfly, underscore growing confidence in next-gen blockchain infrastructure according to market analysis.

In a separate development, Exodus, a crypto wallet provider, acquired Baanx and Monavate for $175 million to integrate card and payments infrastructure. The move aims to bridge the gap between crypto holdings and real-world spending, diversifying revenue streams through interchange and processing fees.

Japan's regulatory push highlights the global trend of aligning crypto with traditional finance's risk-management standards. As exchanges adapt to stricter oversight, innovations like BlockHaven's non-custodial model and Telegram's integrated trading underscore the sector's evolution toward user-centric, secure solutions.