Japan Drops the Hammer: Crypto Exchanges Ordered to Hold Up to $255M in Liability Reserves Starting 2026

Japan’s Financial Services Agency is set to table game-changing legislation in 2026 that will force every licensed crypto exchange in the country to maintain mandatory liability reserves. No more hiding behind “we keep coins in cold storage” excuses – exchanges will have to set aside cash buffers ranging from ¥2 billion to a staggering ¥40 billion ($12.7M–$255M), sized according to trading volume and past security screw-ups. The era of zero-reserve exemptions is officially dead.

The new rules will mandate strict asset segregation, formal customer compensation protocols, and the elimination of loopholes that previously let exchanges dodge reserve requirements by going offline-heavy. In a nod to practicality, the FSA will allow high-grade insurance policies to count toward the reserve obligation, effectively bringing crypto investor protection in line with traditional securities and banking standards. The move is a direct response to decades of trauma – from the 2014 Mt. Gox catastrophe to newer breaches – aimed at finally restoring Japanese retail confidence.

With these measures, Japan is positioning itself as the global leader in crypto consumer protection while sending a clear message: operate here, and you’d better have skin in the game. Smaller exchanges may face existential pressure, larger players will need to lock up serious capital, and users will gain safeguards previously reserved for stock and bank accounts. Love it or hate it, Tokyo is drawing the hardest line yet on exchange accountability.