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.