Japan Proposes Sweeping Crypto Regulatory Overhaul Under FIEA Framework

Japan's Financial Services Agency (FSA) is preparing a seismic shift in digital asset oversight, moving cryptocurrency regulation from the Payment Services Act to the Financial Instruments and Exchange Act (FIEA). The proposed changes—currently under review by the Financial System Review Board—would subject token issuers and initial exchange offerings to securities-style disclosure requirements and audit standards.

The regulatory pivot reflects Tokyo's growing view that cryptocurrencies now function primarily as investment vehicles rather than payment instruments. The FSA's proposal includes a new classification system evaluating 100+ major tokens based on issuer transparency, technical robustness, and consumer protection metrics.

Concurrently, Japan's tax authorities are considering slashing crypto trading taxes from 55% to a flat 20% rate, aligning digital asset taxation with capital gains treatment for traditional securities. This dual approach of tightened oversight with reduced tax burdens suggests Japan aims to balance market integrity with competitive positioning as regional crypto hubs like Hong Kong advance their own regulatory frameworks.