Japan is preparing one of its most significant crypto regulatory overhauls to date. The Financial Services Agency (FSA) plans to move digital assets out of the current Payment Services Act (PSA) and place them under the far stricter Financial Instruments and Exchange Act (FIEA).
This transition would classify cryptocurrencies more like traditional financial products and marks a decisive step toward stronger investor protections, greater transparency, and far tougher enforcement.
The changes are expected to be formalized in a bill submitted to parliament in 2026, setting a new tone for how Japan supervises digital asset markets.
Japan’s FSA proposes shifting crypto regulation from the PSA to the FIEA to strengthen disclosures, regulate IEOs, and target unregistered platforms. The new framework would require exchanges to disclose issuer details and conduct independent code audits, while issuers must…
— Wu Blockchain (@WuBlockchain) December 10, 2025
Stricter Disclosure and Transparency Requirements
The new FIEA framework introduces substantially higher expectations for both exchanges and token issuers:
- Enhanced exchange disclosure
Platforms running Initial Exchange Offerings (IEOs) will be required to publish detailed pre-sale documentation. These disclosures will need to include project team identities, explanations of the blockchain infrastructure, and transparent warnings about price volatility risks.
- Issuer identification
Regardless of decentralization claims, project teams must reveal who is responsible for the token’s issuance, allocation framework, and distribution model. The FSA aims to eliminate anonymous issuers operating without accountability.
- Third-party code audits
All IEOs will now require independent security audits to confirm that smart contracts and project code meet minimum safety and functionality standards.
New Insider Trading Rules Target Market Abuse
A major component of the overhaul is the introduction of explicit bans on insider trading for cryptocurrencies.
Individuals with access to material non-public information – such as internal decisions, upcoming token listings, or changes affecting market value – will be prohibited from trading on that information.
Penalties under the FIEA are expected to mirror those used for securities fraud, marking a dramatic shift from Japan’s previous crypto regime.
Stronger Enforcement Powers for Regulators
Shifting crypto oversight into the FIEA gives Japanese authorities a significantly wider set of enforcement tools:
- The FSA and the Securities and Exchange Surveillance Commission (SESC) will gain authority to pursue harsher penalties against unregistered operators.
- Regulators will be able to issue emergency injunctions against non-compliant platforms.
- The framework will move Japan away from its industry-driven self-regulation model under the JVCEA toward direct government-led supervision.
This positions Japan closer to global regulatory trends, where digital assets increasingly fall under securities-style frameworks.
Potential Tax Reforms for Crypto Investors
The reclassification may also pave the way for a new, simplified crypto tax system.
Japan is considering implementing a flat 20% tax rate on crypto gains, matching the rate used for stock trading.
This would be a major improvement over the current structure, where crypto profits can be taxed as high as 55%, depending on income level.
Such a change could make Japan more attractive to traders and Web3 companies looking for regulatory clarity and a competitive tax environment.
