The protagonist of the story is Japan.

Just a few days ago, in mid to late October 2025, multiple sources reported that the Japanese Financial Services Agency (FSA), known for its rigor and even conservatism, is planning to promote a revolutionary reform: lifting the ban on domestic banks investing in Bitcoin and other cryptocurrencies.

Once the news broke, the market was in an uproar. This is not a trivial matter. If the approval of Bitcoin spot ETFs in the United States opened a window for traditional funds, then Japan's move is akin to tearing down an entire wall. This means that financial giants like Mitsubishi UFJ and Mizuho, which hold billions in assets, may be allowed to directly enter the market and invest real money in cryptocurrencies.

To understand the shock of this policy shift, we must turn the clock back a few years.

Japan was one of the first countries in the world to regulate cryptocurrency, but it also remains wary due to events like the Mt. Gox theft. Especially since the revision of relevant regulations in 2020, the Financial Services Agency of Japan has effectively prohibited banks from holding cryptocurrencies for investment purposes due to the extreme price volatility risks of crypto assets. This 'firewall' has protected the traditional banking system but has also isolated it from a rapidly growing emerging market.

However, in just a few years, the winds have clearly changed. From the lifting of the ban on the circulation of stablecoins in Japan in June 2023, to gradually reforming the tax laws on crypto assets, to now considering allowing banks to directly enter the market, Japanese regulators are demonstrating an unprecedented openness.

The news of this 'proposed lifting of restrictions' is not just about allowing banks to invest. Reports also indicate that the Financial Services Agency is even considering allowing bank groups to apply for licenses to directly provide cryptocurrency trading and custody services. This is almost a comprehensive deregulation that 'allows you to buy, allows you to sell, and also allows you to help others hold.' This series of actions clearly indicates that Japan views the crypto economy as an important part of the country's future competitiveness, attempting to shift from strict prevention to embrace and regulation.

'Whales' have long been eager to go, just waiting for the starting gun.

Do you think Japan's banking giants know nothing about the crypto world and are just waiting for regulatory 'handouts'? That is a big mistake.

In fact, these traditional financial institutions, referred to as 'regular troops,' have long been strategizing on the fringes of the crypto field, eager to spring into action.

Take Japan's largest financial group, Mitsubishi UFJ (MUFG), as an example:

It established a cryptocurrency research team many years ago and attempted to launch its own stablecoin, 'MUFG Coin.'

It once collaborated with the globally renowned cryptocurrency exchange Coinbase to try to establish a compliant trading platform in Japan.

The trust bank under its umbrella has even considered launching crypto asset protection services to address investors' concerns about the security of exchanges.

Additionally, MUFG is actively participating in the infrastructure development of cross-border payments and digital bond issuance based on blockchain.

Another giant, Mizuho Bank, also refuses to back down:

It also once planned to issue its own cryptocurrency, 'J-Coin,' and collaborated with multiple companies for pilot programs.

It is actively collaborating with tech companies like IBM to test the use of blockchain technology for instant settlement and trade finance.

These actions clearly indicate that Japan's banking giants have already completed their technical exploration, talent reserves, and strategic layout in the crypto field. They have built advanced 'pipelines,' familiarized themselves with the 'hydrology,' and now, once the regulatory starting gun is fired, they will be able to open the valves immediately and channel their massive capital 'live water' into the crypto market.

So, when the banking 'behemoth' truly steps into the crypto world, what will it bring?

The answer is: a massive influx of capital and the complete release of market potential.

First, there is a significant difference in the scale of funds. According to forecasts from institutions like IMARC Group, Japan's cryptocurrency market size is expected to grow from about $14 billion in 2024 to over $71 billion by 2033, with a compound annual growth rate of up to 17.38%. And this is still in the absence of major funds like banks. Just imagine, Mitsubishi UFJ alone manages total assets of several trillion dollars. Even if they allocate a tiny fraction of their assets (for example, 0.1%) to cryptocurrencies, it will inject hundreds of billions or even trillions of dollars into the market.

Secondly, there is a boost in confidence in the mainstream market. The entry of banks is itself the strongest endorsement. This will greatly enhance the acceptance and trust of ordinary people and traditional enterprises in crypto assets. Currently, the number of crypto users in Japan is rapidly increasing, and the convenience of investment channels provided by banks will undoubtedly attract more users from outside the circle, pushing crypto assets to become a part of national asset allocation.

Finally, this is also Japan's inevitable choice to align with global trends. From 2024 to 2025, the institutional wave triggered by the U.S. Bitcoin spot ETF will sweep the globe. From Wall Street giants to sovereign wealth funds, institutional money is pouring into the crypto market on an unprecedented scale. Japan clearly does not want to fall behind in this race that concerns the future financial landscape. This regulatory easing is a key step in its efforts to catch up and attempt to lead the trend.

This potential move by the Financial Services Agency of Japan is like a deep-water bomb dropped into a calm lake, and its ripple effect will far exceed Japan's borders. It indicates that globally, the integration of traditional finance and the crypto world is moving from 'testing' to 'combat' stages.

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