Regulatory Framework Transformation: From the "Fund Settlement Law" to the "Financial Instruments and Exchange Act"
The Financial Services Agency (FSA) of Japan previously regulated crypto assets based on the "Fund Settlement Law," using payment methods as the basis for regulation.
As the investment uses of crypto assets continue to expand, the proportion of users holding them for profit has significantly increased, and the current regulatory framework can no longer effectively protect investors' rights.
Against this background, the FSA has decided to shift the regulatory framework to the "Financial Instruments and Exchange Act," placing crypto assets on equal legal footing with stocks, bonds, and other traditional financial products, and related industry players will face compliance standards similar to those of traditional financial institutions.
This transformation also brings Japan’s crypto regulation closer to the mainstream financial regulations of major G7 economies.
Core provisions of the amendment: strengthened obligations and upgraded penalties
Main changes in the amendment include:
Insider trading ban: Explicitly prohibit trading crypto assets using material non-public information, filling gaps in current law.
Annual information disclosure obligations: Crypto asset issuers must regularly disclose financial and business information to regulators and investors.
Change of operator name: Registered operators are officially renamed from "Crypto Asset Exchange Operators" to "Crypto Asset Trading Operators."
Increased criminal penalties: The maximum prison sentence for unlicensed operators is increased from 3 years to 10 years, and the fine cap is raised from 3 million yen to 10 million yen.
The Financial Services Agency (FSA) of Japan previously regulated crypto assets based on the "Fund Settlement Law," using payment methods as the basis for regulation.
As the investment uses of crypto assets continue to expand, the proportion of users holding them for profit has significantly increased, and the current regulatory framework can no longer effectively protect investors' rights.
Against this background, the FSA has decided to shift the regulatory framework to the "Financial Instruments and Exchange Act," placing crypto assets on equal legal footing with stocks, bonds, and other traditional financial products, and related industry players will face compliance standards similar to those of traditional financial institutions.
This transformation also brings Japan’s crypto regulation closer to the mainstream financial regulations of major G7 economies.
Core provisions of the amendment: strengthened obligations and upgraded penalties
Main changes in the amendment include:
Insider trading ban: Explicitly prohibit trading crypto assets using material non-public information, filling gaps in current law.
Annual information disclosure obligations: Crypto asset issuers must regularly disclose financial and business information to regulators and investors.
Change of operator name: Registered operators are officially renamed from "Crypto Asset Exchange Operators" to "Crypto Asset Trading Operators."
Increased criminal penalties: The maximum prison sentence for unlicensed operators is increased from 3 years to 10 years, and the fine cap is raised from 3 million yen to 10 million yen.
