Japan’s financial regulators are preparing a significant overhaul of how the country supervises digital assets, proposing to move crypto regulation from the payments framework into the securities regime. The Financial Services Agency released a detailed report from the Financial System Council’s working group outlining the plan, which reflects growing consensus that crypto assets now function more like investment products than payments instruments.
The shift would relocate oversight from the Payment Services Act to the Financial Instruments and Exchange Act, the core statute governing securities issuance, trading and disclosures. Regulators emphasized that crypto assets are increasingly used by domestic and international investors, which creates the need for a more robust framework aligned with capital markets standards.
Expanded Disclosure Rules for Token Offerings
A primary component of the proposal is enhanced data disclosure for initial exchange offerings. Regulators argue that user-facing token sales resemble traditional securities transactions, requiring clear and timely information about the entities behind each project. Under the new framework, exchanges would be required to provide pre-sale disclosures, commission third-party code audits and incorporate feedback from self-regulatory organizations.
Issuers would also face broader obligations, including mandatory identity disclosures, regardless of whether projects operate through decentralized structures. Regulators intend to ensure greater transparency around token issuance mechanisms and distribution methods, areas that have historically lacked uniform standards in Japan’s digital asset market.
Tighter Enforcement and Evolving Market Structure
The framework would give the FSA stronger enforcement tools to curb unregistered or offshore platforms that target Japanese users. Authorities also plan to introduce explicit prohibitions on insider trading, mirroring elements in the European Union’s MiCA framework and South Korea’s updated rules. These changes indicate Japan’s intent to strengthen its regulatory posture as global jurisdictions converge on securities-style oversight for digital assets.
The initiative comes as the government considers broader tax reform, including a potential shift to a flat 20% rate on crypto capital gains. Separately, the FSA recently signaled caution regarding derivatives linked to foreign crypto exchange-traded funds, describing the underlying assets as not desirable for domestic derivatives markets. Together, the measures point to a calibrated approach that encourages innovation while increasing investor protections and market integrity standards.