Japan Redefines Crypto Regulation

Japan is formally redefining crypto assets, planning to shift their regulatory home from rules designed for payments to those crafted for investments. This acknowledges the dominant financial role these digital assets now play.

The blueprint for this change was published by the Financial Services Agency, based on the work of a key council working group. The report provides a sector-by-sector analysis to inform the new approach.

The mechanism for the shift is a transfer from the Payment Services Act to the Financial Instruments and Exchange Act. The latter is Japan’s comprehensive law for overseeing securities issuance and trading markets.

“Crypto assets are increasingly being used as investment targets,” the report noted, framing the entire shift as a necessary step for robust user protection in a financial context.

A core reform under the securities law would involve imposing stricter disclosure standards on initial exchange offerings. These exchange-managed token sales would be subject to greater scrutiny.

In justifying the move, the document explains that user activity with Bitcoin, Ethereum, and other crypto assets mirrors securities transactions. Consequently, it argues that the sale of new tokens requires the same commitment to timely information as any traditional financial offering.