Japan Plans to Include Cryptocurrency in Securities Regulations

December 10 — Japan’s financial regulatory landscape is undergoing a major overhaul. The Japanese Financial Services Agency (FSA) released a new report from the Financial System Review Board’s working group on Wednesday, proposing to shift crypto asset regulation from the current Payment Services Act (PSA) to the Financial Instruments and Exchange Act (FIEA) — a law focused primarily on investment and securities markets. The report notes crypto assets are increasingly serving as investment targets both domestically and globally, so they need protection under financial product standards. Key changes include: - **Stricter IEO Disclosures**: If covered by the FIEA, exchange-led Initial Exchange Offerings (IEOs) will need to provide more rigorous pre-sale disclosures — including core team details, independent third-party code audits, and input from self-regulatory organizations. - **Issuer Transparency Rules**: Regardless of decentralization, project teams must disclose their identities and token issuance/distribution frameworks. - **Boosted Enforcement Powers**: The new framework will give regulators stronger tools to crack down on unregistered platforms (especially overseas or DEX-like operators) and explicitly ban insider trading — aligning with the EU’s MiCA and South Korea’s regulatory direction. - **Parallel Tax Reform**: Meanwhile, the Japanese government is weighing unifying crypto trading profit tax rates into a single 20% rate. - **Cautious Derivatives Stance**: Also on Wednesday, the FSA voiced caution about approving derivatives for overseas crypto ETFs, stating the underlying assets are “not ideal.”