The Japanese Financial Services Agency (FSA) has proposed moving cryptocurrency oversight from the Payment Services Act (PSA) to the Financial Instruments and Exchange Act (FIEA). The proposal, released on Tuesday by the Financial System Council’s working group, argues that cryptocurrencies align more closely with the framework governing securities.
Currently regulated under the PSA, cryptocurrencies would face stricter requirements under the FIEA. The shift is aimed at enforcing tighter rules on disclosure, price volatility, reliability, and risks associated with trading digital assets. Consumer protection is also expected to increase significantly under this change.
The proposed legislative amendments would need to pass through the Diet before taking effect. If adopted, the PSA would no longer oversee cryptocurrencies to avoid regulatory overlap.
Japan’s Evolving Crypto Landscape
Cryptocurrency development in Japan has been accelerating. In August, Finance Minister Katsunobu Kato acknowledged both the risks and potential of the sector, calling digital assets a viable “option for diversified investment” despite their volatility.
The Financial System Council, which reports directly to the Minister, has also pushed for reforms in crypto taxation. A recent review suggested reclassifying crypto taxes into a new category, proposing a 20% tax rate that could rise to as high as 55% ahead of Japan’s 2026 fiscal reform.
Japan is also preparing to approve its first yen-backed stablecoin later this year. The issuer projects the stablecoin to reach a market capitalization of 1 trillion yen (about $6.8 billion).
Japan’s regulatory push follows a broader trend in Asia. Place like Hongkong have also tightened oversight of cryptocurrencies as their role in the financial system continues to grow.
