Bitcoin Magazine Japan Moves to Mandate Reserves for Crypto Exchanges as Hacks Mount

Japan is preparing another major tightening of its digital-asset rulebook, with the Financial Services Agency (FSA) planning to require crypto exchanges to set aside liability reserves to compensate customers in the event of hacks, operational failures, or bankruptcies, according to reporting from Nikkei.

The proposal marks a shift in how Japan views the risks attached to digital-asset custody. Exchanges are already required to store customer crypto in cold wallets — a measure meant to reduce the chance of theft because the assets are kept offline.

But under current law, firms have no obligation to hold reserve funds if losses occur despite these safeguards. Regulators now see that gap as unacceptable,

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