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Japan’s FSA Proposes Moving Crypto Oversight to Financial Instruments and Exchange Act

Japan's FSA aims to bring crypto under its securities law, the FIEA, to enhance protection for its retail-heavy market and introduce strict penalties for insider trading and unregistered operators.

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Summary

Japan’s Financial Services Agency (FSA) is advancing its proposal to regulate cryptocurrencies under the Financial Instruments and Exchange Act (FIEA), moving away from the Payment Services Act. The plan, detailed in a new discussion paper, targets a retail-dominated market where over 12 million accounts hold ¥5 trillion ($34 billion). It proposes stricter disclosure for fundraising tokens and exchange-level obligations for decentralized assets like Bitcoin. The framework aims to curb unregistered operators and insider trading with penalties including fines up to ¥500 million and prison sentences. A bill is expected by 2026.

Terms & Concepts
  • Financial Instruments and Exchange Act (FIEA): A Japanese law governing securities and financial markets, imposing stricter disclosure, oversight, and penalties for violations like insider trading.
  • Payment Services Act: The current Japanese law overseeing cryptocurrency exchanges, which provides a lighter regulatory framework focused on settlement and custody without strict issuer disclosure.
  • Insider Trading: The illegal practice of trading in a financial market to one's own advantage through having access to confidential, non-public information.