Japan's Financial Services Agency (FSA) is promoting a historic regulatory reform, planning to shift the regulatory framework for crypto assets from the Payment Services Act (PSA), which originally positioned them as 'payment tools,' entirely to the stricter Financial Instruments and Exchange Act (FIEA).
This change signifies that Japan officially recognizes crypto assets are no longer just a means of payment but are 'investment products' on par with stocks and bonds. They will henceforth be subject to securities-level investor protection and information disclosure standards. Analysts point out that Japan's move not only significantly enhances investor protection but also aims to combat fraud and align with mainstream international regulatory frameworks, such as the EU's MiCA.
Regulatory Framework Adapts to Actual Conditions
On December 10, the FSA officially released the final research report from the 'Financial System Research Council · Study Group on Transactions Involving Crypto Assets, etc.' The report straightforwardly states, 'Both domestically and internationally, people are increasingly treating crypto assets as investment targets.' Therefore, the current Payment Services Act framework can no longer accommodate the actual usage scenarios. It must be managed in line with the core securities market law, the Financial Instruments and Exchange Act, to provide more appropriate protection.
The report has already been unanimously approved by the expert group. It is expected to be submitted to the Diet for legislative amendment and officially implemented as early as 2026.
Key Points of the Reform
The content of this reform includes three core focal points:
First, a significant strengthening of information disclosure requirements for 'Initial Exchange Offerings' (IEOs, new token sales reviewed and conducted by exchanges). In the future, exchanges must provide detailed issuer identity, project whitepaper, token economic model, and third-party code audit reports before an IEO sale begins, along with mandatory risk warnings. Even if a project claims to be 'decentralized,' the issuing team cannot evade these requirements through anonymity. This is seen as the strongest measure to end the past chaos of 'worthless tokens.'
Second, adopting stronger enforcement actions against unregistered platforms. The FSA will gain greater investigative and punitive powers, allowing it to directly penalize overseas platforms, decentralized exchanges (DEXs), or underground trading groups, and even issue business suspension orders. The report also explicitly prohibits insider trading and market manipulation, fully aligning with the EU's MiCA and South Korea's latest regulations.
Third, simultaneous tax relaxation. In sync with the regulatory shift, the Japanese government is considering changing the tax classification of crypto asset gains from the current 'miscellaneous income' with a top rate of 55% to a 'capital gains tax of 20%,' the same as for stocks. This is expected to significantly stimulate institutional and retail investment interest. This reform is viewed as a major turning point for Japan, moving from 'preventing malpractice' to 'promoting benefit.'
