Crypto Regulation in Flux: Germany Excludes Bitcoin from Retirement Savings, Japan Tightens Exchange Requirements

Germany Opts for Controlled Investment Freedom

Germany's new retirement savings account marks a turning point in private retirement planning – but with clear limits on cryptocurrencies. The draft legislation for the reform of private retirement provision has been released and is set to be approved by cabinet next week ^[1]. After two decades of low-yield Riester products, citizens should in future be able to make more self-determined provisions for old age.

However, Bitcoin and other cryptocurrencies remain explicitly excluded. The new account permits investments only up to risk category five – which includes ETFs, funds and bonds, but not digital assets ^[1]. The rationale: Bitcoin is considered too risky for retirement savings.

Contrasting Philosophies: USA versus Germany

The contrast with other markets could hardly be starker. In the United States, savers can decide for themselves whether stocks, ETFs, gold or Bitcoin should be part of their retirement provision ^[1]. There, the state merely sets the regulatory framework, while citizens determine the actual asset allocation.

Germany, by contrast, relies on a "curated selection," as critics complain ^[1]. Despite Bitcoin's superior performance over the past fifteen years, the "innovation class" remains excluded. The retirement savings account is thus viewed as a step in the right direction, but true self-determination looks different ^[1].

Japan Tightens Regulation Following Historical Losses

Japan, meanwhile, is pursuing a different approach: The country is planning to introduce strict reserve requirements for cryptocurrency exchanges. The Financial Services Agency (FSA) intends to introduce new rules that would require exchanges to hold special "liability reserves" to protect customers from losses due to hacks or unauthorized transfers ^[2].

The background: Japan has a long history of serious security incidents in the crypto sector. The 2014 Mt. Gox hack, in which over 740,000 Bitcoin were stolen, led to the exchange's insolvency – the repayment process continues to this day ^[2]. In May 2024, the Japanese exchange DMM Bitcoin lost 4,502.9 BTC in a theft ^[2].

Details of Planned Japanese Regulation

According to a report in The Nikkei, the new rules will require all registered cryptocurrency exchanges to hold liability reserves ^[2]. These reserves must be used to compensate customers for unauthorized transfers – even for assets held in cold wallets.

The FSA plans to base the reserve levels on standards already applied to securities firms in Japan. Traditional securities firms must hold reserves between 2 and 40 billion yen depending on their size, risk profile and activity level ^[2].

To avoid overly burdening smaller operators, the FSA is considering allowing exchanges to fulfill part of the requirements through approved insurance policies ^[2]. Details such as acceptable policy types and minimum coverage amounts are still being discussed.

Far-Reaching Industry Implications

The changes will have significant impacts: exchanges must expect higher operating costs, and smaller providers may struggle to meet requirements, potentially leading to industry consolidation ^[2].

For customers, however, the reserves mean better protection against losses and faster compensation in the event of claims ^[2]. Japan's approach could also serve as a model for other countries, promoting more professional custody and risk management practices globally.

Many details remain open, including the exact calculation method for reserve levels and implementation timelines for existing exchanges ^[2]. The final regulations will depend on the Financial System Council's report and 2026 legislation.