Japan's Financial Services Agency (FSA) has proposed a significant shift in cryptocurrency regulation, moving oversight from the Payment Services Act to the Financial Instruments and Exchange Act (FIEA). This change aims to strengthen investor protection by subjecting crypto assets to securities-like regulations, including stricter disclosure requirements for issuers and enhanced rules against unfair trading practices.
The proposal, presented to the Financial System Council on September 2, 2025, comes as crypto plays an increasingly important role in Japan's economy. The FSA reports over 12 million cryptocurrency exchange accounts nationwide with user deposits exceeding 5 trillion yen ($33.7 billion) - approximately one account for every 10 people. Notably, 7.3% of Japanese with investment experience hold crypto, surpassing those trading FX or corporate bonds.
While the move would provide greater transparency and reduce information asymmetry between issuers and investors, some experts have raised concerns. Kyoto University professor Naoyuki Iwashita warned against treating all cryptocurrencies as securities, particularly noting that many domestic Initial Exchange Offerings (IEOs) have lost over 90% of their value. The FSA plans to submit formal legislative amendments during the next ordinary Diet session in 2026, though the proposal currently remains an internal briefing document without legal binding force.
