At the same time, Japanese lawmakers are advancing a ban on crypto insider trading that could take effect by 2026. Together, these initiatives mark the country’s biggest policy shift since crypto exchanges were first licensed in 2017.

Background: From Restriction to Reform

Since 2020, the FSA has allowed banks to work only through licensed crypto exchanges. That restriction was meant to protect retail investors after a series of high-profile breaches.

Now the regulator is rethinking its approach. Japan counts more than 12 million crypto trading accounts, and institutional demand keeps growing. The goal is to build a framework where traditional banks can handle digital assets safely within a regulated environment.

>>> Read more: $9.6 Billion Mt. Gox Payout Shakes Bitcoin

Reform #1 — Allowing Banks to Hold and Trade Bitcoin

The first reform centers on market access. Under the new proposal, Japan’s banks could expand into Bitcoin trading, buying and holding leading digital assets such as Bitcoin and Ethereum.

The FSA is also considering whether banks or their subsidiaries could register as licensed crypto-exchange operators.

Safeguards would mirror those used in securities markets. These include capital and liquidity requirements, asset segregation, and clear custody rules.

For banks, the change opens new revenue streams from custody, brokerage, and integrated trading services. At the same time, it gives clients confidence through regulated oversight.

Reform #2 — Banning Crypto Insider Trading

In parallel, the government is preparing a legal amendment to extend the Financial Instruments and Exchange Act (FIEA) to crypto. The plan aims to introduce a comprehensive crypto insider trading ban that criminalizes trading based on non-public information, such as token listings or upcoming exchange integrations.

The bill is expected to reach the Diet by 2026. Once passed, it would empower the Securities and Exchange Surveillance Commission (SESC) to investigate misconduct and impose penalties.

This move brings crypto-market conduct closer to traditional securities standards as institutional participation expands.

Liberalization with Oversight

The FSA’s strategy combines opportunity with restraint. Allowing Japan’s banks to participate in Bitcoin markets adds institutional credibility and liquidity.Through the crypto insider trading ban Japan ensures that this openness comes with accountability.

Officials describe the framework as controlled openness: innovation under stricter rules rather than deregulation.

Regional Context and Global Impact

Japan’s reforms arrive amid regional competition. Hong Kong and Singapore already permit limited bank-level crypto services. Tokyo wants to match that pace while maintaining its reputation for investor protection.

Analysts believe that once Japanese banks begin trading or offering custody, other G7 regulators may follow the same model.

Implications for Banks and the Crypto Industry

• Banks in Japan gain a regulated pathway to participate in Bitcoin markets, expand custody offerings, and attract younger retail clients.
• Exchanges could see new partnerships or mergers as financial groups enter the space.
• Investors benefit from better protection, clearer rules, and transparent institutions.

This alignment between access and oversight could redefine how Japan’s financial system engages with digital assets.

What Happens Next

The FSA plans to release a draft outline later in 2025, followed by a consultation process and a Diet vote in 2026. Implementation will depend on feedback from banking associations and the Japan Virtual and Crypto Assets Exchange Association (JVCEA).

Observers expect phased adoption. First custodial services, then full trading authorization once conduct rules are finalized.

>>> Read more: Ripple Japan – Strategic Partnerships and Market Expansion

Japan’s new crypto strategy reflects a pragmatic balance. The FSA intends to let Japan’s banks deepen their involvement in Bitcoin within a controlled framework, while enforcing a strong crypto insider trading ban to protect investors.

If both reforms proceed as planned, Japan will pair institutional access with integrity, setting a benchmark for how traditional finance and blockchain can coexist responsibly.

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The Hack in Detail

SBI Crypto operates one of Japan’s leading crypto-mining pools and serves as a key part of SBI Holdings’ broader digital asset strategy. According to initial reports, attackers siphoned off around $21 million worth of Bitcoin, Ethereum, and Dogecoin from the firm’s wallets. While SBI confirmed the breach, the company has not disclosed the exact timeline or the full scale of the compromise.

Blockchain analysts tracking the movement of funds say the tokens passed through Tornado Cash to obscure their origins. The service makes stolen assets harder to trace by splitting them into smaller transactions before redistributing them to new wallets.

Lazarus Group and Their Playbook

The Lazarus Group, a North Korean state-backed hacking unit, has developed a notorious track record for targeting the crypto industry. They have been linked to the $600 million Axie Infinity exploit, the Harmony Bridge attack, and breaches of multiple wallet providers.

Investigators point to familiar laundering methods in the SBI case. The perpetrators split the funds into smaller amounts and routed them through mixers, echoing tactics seen in past operations. These patterns, combined with blockchain forensics, have strengthened suspicions that the same group is behind the $21 million theft.

Tornado Cash in the Spotlight

A major part of the SBI Crypto hack is the laundering route. Analysts confirmed that large portions of the stolen Bitcoin and Ethereum were sent through Tornado Cash. The protocol is already under heavy scrutiny by U.S. regulators.

The U.S. Treasury sanctioned the service in 2022 for its role in facilitating billions of dollars in money laundering. Much of that activity involved North Korean actors. Proponents still defend Tornado Cash as a privacy tool. However, incidents like this raise further concerns over its exploitation by criminal organizations.

Japan’s Growing Exposure to Crypto Crime

Japan has long positioned itself as one of the world’s most tightly regulated crypto markets. Yet the SBI Crypto hack shows that even highly compliant institutions are not immune to state-backed cyberattacks.

SBI Holdings has played a central role in integrating digital assets into traditional finance in Japan. However, the loss may prompt regulators to reconsider the security standards of mining pools and custodians. For the broader industry, the incident reinforces Japan’s vulnerability in a region already targeted by North Korean hacking campaigns.

Global Policy Implications

The SBI Crypto theft is not only a Japanese issue but also a global one. Laundering across borders using crypto mixers continues to frustrate regulators, who face the challenge of balancing innovation with law enforcement.

The United States, European Union, and Japan may now face renewed pressure to coordinate efforts against state-backed cybercrime. Analysts warn that stolen crypto continues to fund North Korea’s weapons development programs. That reality raises the stakes well beyond financial loss, turning hacks into geopolitical concerns.

Industry Response and Next Steps

So far, SBI has released only limited details about its internal response. It is unclear whether insurance will cover part of the loss or if restitution will be offered to customers. Investigations are ongoing, with blockchain analytics firms closely monitoring the stolen funds.

Industry leaders are calling for stronger public-private collaboration. Faster identification of stolen assets and tighter security practices are now seen as crucial to protecting the industry from repeat attacks.

>>> Read more: Bybit Response to the $1.5 Billion Heist

The $21 million hack on SBI Crypto illustrates how vulnerable even major financial players remain to coordinated cyberattacks. With North Korean hackers once again in the spotlight and Tornado Cash serving as the laundering channel once more, the incident highlights a recurring cycle: theft, obfuscation, and geopolitical tension.

For regulators and the industry alike, the SBI case underscores the urgent need to harden defenses and establish clear global standards to disrupt the playbook of state-backed cybercriminals.

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Details of the DMM Bitcoin Crypto Hack Japan

On May 31, DMM Bitcoin detected an “unauthorized leak” of approximately 4,503 Bitcoin, valued at around $305 million. The exchange promptly suspended several services, including cryptocurrency withdrawals, to prevent further losses. The breach was identified at 1:26 p.m. local time, prompting immediate action to secure their systems and investigate the incident.

Blockchain security experts from Beosin and Chainalysis highlighted the scale of this hack. They noted that the stolen funds have been distributed across ten different addresses. The exchange has yet to provide detailed information about the methods used by the hackers. Speculation includes traditional exchange attacks or sophisticated address spoofing scams.

Historical Context and Impact

This hack is the second-largest crypto theft in Japan. It trails only behind the 2018 Coincheck hack, where 58 billion yen was stolen. The incident has prompted Japan’s Financial Services Agency to demand a thorough investigation. Also, the Tokyo police have launched a probe into the theft.

DMM Bitcoin has assured its customers that their Bitcoin deposits will be fully guaranteed. The exchange plans to replace the stolen assets with support from its group companies. This promise aims to mitigate user impact and restore trust in the exchange’s security measures.

Industry Reactions and Security Measures

The broader crypto community has reacted with concern to this latest breach. Lorenzo Franceschi-Bicchierai from TechCrunch highlighted that this incident follows a troubling trend of large-scale crypto thefts, although the overall number of such incidents has decreased since 2020.

Security firms like Elliptic and De.Fi closely monitor the situation, emphasizing the need for more robust security protocols within crypto exchanges. According to Immunefi, the industry had already lost over $473 million to hacks and fraud in the current year before the DMM Bitcoin incident.

Conclusion

The DMM Bitcoin crypto hack in Japan is a stark reminder of the cryptocurrency industry’s ongoing security challenges. While the exchange has moved swiftly to address the breach and reassure its customers, the incident highlights the need for continuous advancements in security measures to protect digital assets.

As investigations continue, the crypto community will be watching closely to see how DMM Bitcoin and regulatory bodies respond to this significant breach. Ensuring the safety of digital assets remains a top priority, and this incident may serve as a catalyst for further improvements in exchange security practices.

In summary, the DMM Crypto Hack Japan has brought to light the vulnerabilities within the cryptocurrency exchange ecosystem, urging both users and exchanges to prioritize robust security protocols to safeguard against future threats.

Read more: Crypto Crime 2023 – Chainalysis Report

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Partnership with HashKey DX

Ripple recently announced a collaboration with HashKey DX, a Tokyo-based consulting company specializing in blockchain technology. This partnership aims to introduce XRPL-powered solutions to Japan, focusing on supply chain finance. By leveraging the decentralized nature of the XRPL, they plan to tokenize and exchange both crypto-native and real-world assets. This initiative paves the way for enhanced efficiency and transparency in the Japanese business landscape.

SBI VC Trade’s Validator Launch

In addition to the partnership with HashKey DX, Ripple’s subsidiary SBI VC Trade has launched a validator on the XRP Ledger. This validator confirms the validity of transactions on the XRPL. It signifies SBI’s commitment to securing the network and representing the voices of XRP holders in Japan. By becoming a trusted validator, SBI VC Trade aims to contribute to the enhancement and stability of the XRPL ecosystem.

Ripple’s Longstanding Presence in Japan

Ripple’s partnership with Japanese financial giant SBI Holdings dates back to 2017, focusing on enhancing cross-border payments efficiency. CEO Brad Garlinghouse has praised Japan as one of the most crypto-friendly jurisdictions, highlighting the company’s commitment to the market. With recent expansions and collaborations, Ripple is solidifying its position as a key player in the Japanese cryptocurrency landscape.

Market Response and Future Outlook

Ripple’s efforts in Japan have been well received by the market, boosting the value of XRP post announcement. Despite regulatory uncertainties and market fluctuations, Ripple remains hopeful about its prospects in Japan and how it could influence the global cryptocurrency sector. Forming alliances and growing its reach the company is set to fuel innovation and acceptance in the Japanese market.

Ripple highlights its dedication to advancing innovation and acceptance in the cryptocurrency domain through its alliances and endeavors to broaden its presence in Japan. As it focuses on implementing solutions driven by XRPL technology and ensuring network security, the company stands ready to seize opportunities emerging from Japan’s growing enthusiasm for technology. Through partnerships with significant industry stakeholders, Ripple hopes to significantly impact the shaping of the financial landscape, not only in Japan but also globally.

Read more: Ripple and CIB Collaboration Signals New Era in Egypt’s FinTech

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On 8th of July Binance launched a global initiative for collecting funds to remedy the tragic flood in West Japan. It happened in June-July this year and it was devastating: more than 8 million people had to evacuate due to the heavy downpour. By the end of July, 20,225 people were reported dead and 13 missing and thousands of houses and factories were destroyed. According to the Japan Times, affected people still live in despair, sheltered in temporary barracks with no hope for a normal life again.

Yesterday, Binance released a blog post with the exact sum of the raised donations: the equivalent of $1,410,000 USD in various ERC20 tokens. The funds were distributed to local NGOs and NPOs, which activated a network of volunteers who helped the victims. The post aims to keep transparency of the donations’ spending, listing affiliate Japanese organizations such as Peace Winds Japan, Momotarou Fund, Open Japan and Kure City Office, among others.

For the transaction procedure, Open Japan said:

It wasn’t difficult to get our account set up, and once everything was ready Binance contacted us to proceed with the donation. It was carried out instantly, and after confirming the transfer we were able to convert it to Japanese yen. Receiving this donation left us with a deep impression of cryptocurrency: both its growing effect on our world and its potential.

The announcement ends with the determination that other initiatives will follow. After the cryptocurrency boom, many charity organizations like the Red Cross and Save the Children started using the technology for a faster and more convenient way to raise donations.

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