Japan's Financial Services Agency 's "crypto redefinition": A regulatory storm worth billions
While the world debates whether cryptocurrencies should be included in the traditional financial system, Japan's Financial Services Agency (FSA) has quietly dropped the regulatory hammer. According to the latest disclosure from Nikkei News, this country with 7.34 million active crypto accounts will push for amendments to the (Financial Instruments and Exchange Act) before 2026, formally upgrading cryptocurrencies like Bitcoin from "payment tools" to "financial products."
This seemingly technical classification adjustment is a key step in rewriting global crypto market rules.
1. The deeper logic behind Japan's regulatory shift
1.1 From "wallet" to "stock account": The trillion-dollar market behind identity switching
According to current (Payment Services Act), Japan defines cryptocurrencies as "electronic payment methods." This classification leads to two major regulatory loopholes:
Legal blind spot: Exchanges only need to register to operate, lacking substantive regulation over investment services
Arbitrage opportunity: Crypto fraud cases in Japan surged by 47% in 2023, with amounts exceeding 30 billion yen
The Financial Services Agency's adjustment directly targets the core issue: categorizing crypto assets as financial products means that all service providers involved in crypto investment must operate with licenses. In the regulator's words, "This is akin to copying the firewall of the stock market to the crypto field."
1.2 Internal trading sniper battle: Installing "trackers" on anonymous transactions
The most significant weapon of the new regulations is the complete transplantation of stock market anti-internal trading rules to the crypto market. This includes:
Exchanges must establish trading monitoring systems
Mandatory identity registration for large traders
Suspected market manipulation will face criminal accountability
This precisely echoes the global initiative by the International Organization of Securities Commissions (IOSCO) in 2023. Japan is trying to tame the "Wild West" of the crypto market with the mature regulatory framework of traditional finance.
2. Japan's position in the global regulatory race
2.1 The regulatory cold war between the East and the West
When the EU clearly prohibited internal crypto trading through the MiCA regulation, Japan chose a more radical reform path:
Hong Kong: Allows retail trading but limits leverage (up to 5 times)
Singapore: Strict control over the number of exchanges (only 18 licensed institutions)
Japan: Building a comprehensive financial system from tax collection to trading
The most groundbreaking is that the ruling party in Japan is pushing to lower the crypto capital gains tax from 55% to 20%. This combination of "low tax + strict regulation" is reshaping global capital flows.
2.2 Stablecoins breaking the ice: SBI’s "compliance test field"
In March of this year, SBI VC Trade obtained Japan's first stablecoin trading license. This seemingly ordinary approval hides a mystery:
Allow direct trading of USDC and other dollar stablecoins
Establish an official exchange channel between yen and crypto assets
Pave the way for future central bank digital currencies (CBDC)
An official from the Financial Services Agency revealed: "Stablecoins are a strategic bridge connecting fiat currency and the crypto world, and we must take the initiative in regulation."
3. The butterfly effect in the crypto market
3.1 The life-and-death struggle of exchanges: The elimination race behind licensing thresholds
According to the new regulations, exchanges need to meet dual compliance requirements:
Current system: Payment service registration (threshold of about 50 million yen deposit) with new requirement: Financial instrument business license (requires 1 billion yen in capital)
This means that 90% of small and medium exchanges will be forced out, and market concentration may rise to the top 3 accounting for 80% of the share.
3.2 Countdown to ETF unblocking: The signal for traditional capital's entry
The Financial Services Agency of Japan is evaluating the feasibility of crypto ETFs, which is seen as the last barrier for institutional funds like pensions to enter. Referring to the experience of U.S. Bitcoin ETFs, once opened, it may bring:
Annual new institutional capital exceeding 2 trillion yen
Crypto market volatility decreases by 40%-60%
Explosive growth in derivatives trading volume
4. Future insights from the Tokyo testbed
As we look towards 2026, Japan's regulatory experiment may define three global standards:
Classification standard: Establishing a bifurcated system of "payment type tokens" and "investment type tokens"
Tax framework: Creating a fiscal model of "independent tax types + preferential tax rates"
Cross-chain regulation: Leading to achieve unified monitoring of traditional securities and crypto assets
As Akihisa Shiozaki, head of digital assets at Nomura Securities, said: "The regulatory yardstick measures market maturity; Japan is proving that the crypto economy can be both vibrant and safe."
In this global crypto regulatory revolution, decision-makers in Tokyo have revealed their underlying logic through a set of data: When 74% of young people in Japan hold crypto assets, rather than blocking, it’s better to facilitate. This impending financial paradigm shift may give us a clearer answer—between the ideal of decentralization and the reality of centralized regulation, how much dialogic space truly exists.