Japan Proposes Overhaul in Cryptocurrency Classification

Reading Time: < 1 minute

Japan’s financial authorities are set to reclassify crypto assets, moving their regulatory supervision away from the nation’s payments system and into rules designed for investment products. This marks a fundamental shift in how the country perceives and governs these digital assets.

The strategy was detailed in a report released by the Financial Services Agency (FSA), stemming from the Financial System Council’s Working Group. The document assesses the current regulatory standing of cryptocurrencies across various sectors.

The central proposal is to transfer the legal foundation for crypto regulation from the Payment Services Act to the Financial Instruments and Exchange Act. The latter act is the cornerstone for governing securities markets, trading, and issuer disclosures.

“Crypto assets are increasingly being used as investment targets both domestically and internationally,” the report stated. It emphasized that user protection necessitates a framework treating crypto as a financial product.

A significant change under the new act would be enhanced data disclosure rules for initial exchange offerings. These are token sales managed directly by crypto exchanges.

The report noted that user transactions in crypto resemble securities transactions, involving both new sales and secondary trading. It stressed that providing timely information during IEOs is therefore of critical importance.