Japan Shifts Crypto Oversight to Securities Regulation with Stricter Rules and Tax Reforms
Japan has announced a major regulatory shift by moving crypto oversight from the Payment Services Act to the Financial Instruments and Exchange Act. This change will treat digital assets under securities trading laws, encompassing disclosures and market conduct rules.
A report by the Financial System Council Working Group highlighted that the current regulatory framework does not adequately address crypto risks, such as speculative trading and large inflows. Over 86% of domestic users expect long-term gains, and deposits on registered platforms exceed 5 trillion yen, underscoring the need for stronger investor protection.
Under the new regime, token sales on exchanges will require stricter disclosures including pre-sale information, independent code audits, and clearer descriptions of who controls projects. Even fully decentralized assets will be scrutinized, with exchanges required to provide neutral risk assessments based on verifiable data.
Insider-trading rules will be explicitly expanded to cover token listings, significant system breaches, and large-scale issuer sales. These rules will apply to exchange staff, token developers, and others with access to undisclosed information.
Exchanges will be held to broker-like standards, including risk-tolerance assessments for complex or volatile trading and investment limits for token offerings that have not completed financial audits. While banks and insurers cannot run exchanges directly, subsidiaries may offer crypto trading through highly supervised channels.
In November 2025, the Financial Services Agency (FSA) proposed a custody-provider registration system and new rules for outsourced trading software firms following a breach at DMM Bitcoin. Additionally, a joint stablecoin pilot involving Japan’s three largest banks aims to create yen-backed digital tokens under a shared framework.
Tax reforms are planned to replace the current progressive crypto gains tax, which can go up to 55%, with a flat 20% levy starting in 2026.
