Japan to Redefine Crypto as Financial Instruments in Major Regulatory Overhaul
Japan’s Financial Services Agency (FSA) has unveiled a landmark regulatory shift, reclassifying cryptocurrencies from payment methods to financial instruments. The move, outlined in a January 10 report, marks the country’s most significant crypto policy update since 2016.
The new framework will transfer crypto oversight from the Payment Services Act to securities regulations, imposing stricter disclosure requirements for Initial Exchange Offerings (IEOs), mandatory code audits, and enhanced issuer transparency. Fiat-backed stablecoins remain exempt, staying under existing payments law.
This overhaul follows six months of deliberation by the Financial System Council’s working group, responding to investor protection concerns after multiple IEO tokens underperformed. The changes reflect Japan’s attempt to balance innovation with consumer safeguards in an evolving global market.
