Japan Considers Merging Crypto Oversight Into Securities Law, Faces Pushback

Japan's Financial Services Agency (FSA) has proposed a significant regulatory shift, aiming to bring cryptocurrency oversight under the Financial Instruments and Exchange Act (FIEA). Currently governed by the Payment Services Act, the move seeks to align crypto assets with securities regulation, emphasizing investor protection and market transparency.

The proposal, presented during a Financial System Council working group, would subject crypto issuers and exchanges to stricter requirements akin to traditional securities. While the FSA argues this framework would deter misconduct, advisory council members remain cautious about overextending the regulatory scope.

Crypto's payment functionality WOULD remain unaffected, but token issuers must disclose detailed risk factors including price volatility and reliability. The FSA plans to submit legislative amendments during next year's ordinary Diet session.

Initial Exchange Offerings (IEOs) emerged as a point of contention during discussions, with experts expressing skepticism about their fit within the proposed framework.