Japan’s Financial Services Agency (FSA) is considering designating cryptocurrencies as securities and requiring digital asset businesses to disclose more information. The agency believes that a more transparent crypto could strengthen investor protection.
The FSA is still studying the existing with experts on reforming the crypto regulations. If any reform to the regulation is made, the agency will announce it by June.
The reforms of FSA’s securities law may bolster crypto adoption in Japan.
The finance agency is deciding whether to regulate digital currency under established securities laws within the Financial Instrument and Exchange Act or draft new rules under the FIEA or the Payment Services Act. The agency is also deliberating whether to apply the new rule to major cryptos like Bitcoin or Ethereum.
Nonetheless, the FSA should make its decision by June before consulting with the Financial System Council, which expects to hold a meeting in the fall. Then, in 2026, an amendment could be drafted and submitted to the National Diet.
If the securities law is enacted on digital assets, it could weigh down on crypto retail investors. However, the concrete regulations will help reinforce the attractiveness of spot crypto ERFs, as the agency is considering repealing the ban on these assets.
However, the FSA said that ETFs need to be reviewed before lifting the ban.
Furthermore, the agency could potentially reduce the tax rates, cutting it from as high as 55% to around 20% on digital assets.
