Japan’s financial regulators are planning to move cryptocurrency oversight from the country’s payments framework to a system designed for investment and securities markets. The Financial Services Agency (FSA) published a report on Wednesday from the Financial System Council’s Working Group, addressing crypto regulation across various sectors. The report suggests transferring legal foundations of crypto regulation […]Japan’s financial regulators are planning to move cryptocurrency oversight from the country’s payments framework to a system designed for investment and securities markets. The Financial Services Agency (FSA) published a report on Wednesday from the Financial System Council’s Working Group, addressing crypto regulation across various sectors. The report suggests transferring legal foundations of crypto regulation […]

Japan to Shift Crypto Regulation from Payments to Securities Law

2025/12/11 02:00
  • Crypto oversight in Japan is shifting to securities regulations for better user protection.
  • Proposed IEO rules require exchanges to disclose key entities and conduct third-party audits.
  • Japan considers a 20% flat tax on crypto profits and bans insider trading in line with global standards.

Japan’s financial regulators are planning to move cryptocurrency oversight from the country’s payments framework to a system designed for investment and securities markets. The Financial Services Agency (FSA) published a report on Wednesday from the Financial System Council’s Working Group, addressing crypto regulation across various sectors.

The report suggests transferring legal foundations of crypto regulation to the Financial Instruments and Exchange Act (FIEA), in which securities markets, issuance, trading, and disclosures are regulated. 

It promotes the increased focus on crypto assets as investment objects, both locally and globally, and the regulatory requirements that perceive crypto as a financial product to enhance the security of users.

FIEA Boosts Disclosure in Crypto Transactions

One of the most important developments related to crypto becoming a part of the FIEA is the further empowerment of data disclosure when it comes to initial exchange offerings (IEOs), or token sales made by exchanges.

According to the document, transactions by users are comparable to securities transactions and can include selling new digital assets or buying and selling assets that are already in circulation. It highlights that customers need timely information in IEO sales.

The IEO’s proposal requires exchanges to make pre-sale disclosure, among other things. Such disclosures should also involve comprehensive disclosure of the main entities behind the offering. It also requires a code audit by third-party experts and invites consideration of the feedback provided by self-regulating organizations.

Also Read: Japan Plans 20% Flat Tax on Crypto Profits as Part of Its 2026 Reform Package

Crypto Issuer Transparency and Global Compliance with MiCA

Besides the functions of exchanges, the issuers must also reveal their identities, whether the project is decentralized or not, and present information about how tokens get issued and distributed.

The suggested framework would give regulating bodies more powerful resources to address unregistered sources, particularly the ones located abroad or those connected to decentralized exchanges. It also incorporates explicit bans on insider trading, as it complies with the Markets in Digital Assets (MiCA) framework in the European Union and the regulations of South Korea.

This news follows the Japanese government review of proposals to lower the maximum tax rate on digital asset profits, which suggests a flat tax on all asset trading gains amounting to 20%. The FSA was also cautious about permitting derivatives on foreign digital asset exchange-traded funds on Tuesday, reportedly describing the underlying assets as undesirable.

Also Read: Bitcoin Trading Now Available at $500B PNC, First Major US Bank via Coinbase

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