Japan's FSA Proposes Shifting Crypto Oversight to FIEA With Stricter Investor Protections

Japan's Financial Services Agency outlined a plan to move crypto asset regulation from the Payment Services Act to the Financial Instruments and Exchange Act, which governs investment and securities markets, according to a Financial System Council working group report released on Dec. 10. Key changes include stricter disclosure requirements for IEOs such as project core team details, third-party code audits and self-regulatory organization input, as well as mandatory issuer identification and token distribution disclosures regardless of decentralization level. The framework would expand enforcement against unregistered platforms including overseas and DEX-like operators, explicitly prohibit insider trading in line with EU's MiCA and South Korean rules, while Japan's government separately considers a unified 20% tax rate on crypto trading profits and the FSA voiced cautious views on derivatives tied to overseas crypto ETFs, describing the underlying assets as "not ideal."