Japan's crypto regulation to shift towards a "securities" framework: IEO and unregistered platforms face the strictest era, with tax rates halved to align with stocks

Japan’s Financial Services Agency (FSA) is pushing forward with a historic regulatory reform, preparing to transfer the regulatory framework for crypto assets from the original designation as “payment tools” under the Payment Services Act (PSA) to a more stringent framework under the Financial Instruments and Exchange Act (FIEA). (Background: Japan’s regulation upgrade “strictly enforces responsibility reserves,” requiring exchanges to reserve cash deposits for user compensation) (Additional background: Bloomberg reports that Japanese exchanges are studying “resistance against DAT companies”: reducing phenomena like Metaplanet hoarding cryptocurrencies) Japan’s Financial Services Agency (FSA) is pushing forward with a historic regulatory reform, preparing to transfer the regulatory framework for crypto assets from the original designation as “payment tools” under the Payment Services Act (PSA) to a more stringent framework under the Financial Instruments and Exchange Act (FIEA). This change signifies that Japan officially recognizes crypto assets no longer as just payment methods, but as “investment products” on par with stocks and bonds, which will be subject to investor protection and disclosure standards at the securities level in the future. Analysis indicates that this move not only greatly enhances investor protection but also aims to combat scams and align with international mainstream regulations such as the EU’s MiCA framework. Regulatory framework adapts to actual conditions On December 10, the FSA officially announced the final research report of the “Financial System Research Council Crypto Asset and Related Trading Subcommittee,” which frankly states: “Both domestically and internationally, the public increasingly regards crypto assets as investment targets.” Therefore, the current payment law framework can no longer respond to actual usage scenarios and must be managed in accordance with the core securities legislation, the Financial Instruments and Exchange Act, to provide more appropriate protection. The report has already received unanimous approval from expert panels and is expected to be submitted to the Diet for law amendments and implementation as early as 2026. Key reforms The reform includes three core points: First, significantly strengthen information disclosure requirements for “Initial Exchange Offerings” (IEOs, new tokens issued and sold by exchanges after review). In the future, exchanges must provide detailed issuer identity, project whitepapers, tokenomics models, third-party audit reports of the code, and mandatory risk disclosures before launching an IEO; even if a project claims to be “decentralized,” the issuing team cannot remain anonymous to evade scrutiny. This move is seen as the strongest measure to end the past “air coin” chaos. Second, tougher enforcement against unregistered platforms. The FSA will gain greater investigative and punitive powers, directly fining offshore platforms, decentralized exchanges (DEX), or underground trading groups, and may even issue suspensions. The report explicitly bans insider trading and market manipulation, fully aligning with EU MiCA and South Korea’s latest regulations. Third, tax policies will be relaxed concurrently. Along with regulatory changes, the Japanese government is considering reducing the crypto profit tax rate from the current maximum of 55% “miscellaneous income” to 20% capital gains tax similar to stocks, which is expected to significantly stimulate institutional and retail participation. This reform is regarded as a major turning point for Japan’s shift from “prevention of abuse” to “promotion of profit.” Related reports Japan Government Bond Auction “Sold Out in Seconds,” Yield Slightly Fell, Market Confident on Rate Hike by Year-End Japan Establishes DOGE Government Efficiency Department, Satsuki Katayama: Supports Sanae Sato’s Active Responsible Fiscal Policy Rich Dad: Japan’s 30-year “Interest Rate Spread Trade End” Epic Bubble Approaching, I Will Teach You Ten Tricks to Save Your Life <Japan Crypto Regulation Moving Toward “Securities” Framework: IEO and Unregistered Platforms Face the Strictest Era, Tax Rate Halves to Align with Stocks> This article was originally published on Dongqu BlockTempo, “Dongqu Dynamics - The Most Influential Blockchain News Media.”