New framework strengthens disclosures for token offerings and targets unregistered platforms
Japan is preparing a significant overhaul of its digital asset oversight by shifting cryptocurrency regulation from the Payment Services Act to the country’s primary securities regime, the Financial Instruments and Exchange Act. The change marks a major step toward treating crypto as an investment product rather than a payments tool, according to a newly released report from the Financial System Council’s working group.
The report states that “crypto assets are increasingly being used as investment targets,” underscoring regulators’ concerns that the existing payments-based framework no longer provides adequate investor protection. Under the proposed shift, crypto exchanges and token issuers will face stricter governance obligations similar to those applied to traditional securities markets.
A central feature of the new approach is strengthened disclosure rules for initial exchange offerings (IEOs). Regulators plan to require pre-sale transparency, including detailed information about the organizations behind a token, as well as independent third party code audits. The document stresses that crypto transactions resemble securities transactions, highlighting the need for consistent and timely disclosures during token sales.
Issuers would also face clearer responsibilities, including mandatory disclosure of project identities, token distribution methods and operational structureseven for decentralized initiatives.
The framework would provide stronger tools to address unregistered or offshore platforms, including those linked to decentralized exchanges, and introduce specific insider trading prohibitions, echoing global regulatory trends such as Europe’s MiCA and South Korea’s crypto laws.
The regulatory update comes as policymakers debate a flat 20% tax rate on crypto trading profits and as Japan’s financial authorities express caution toward allowing derivatives tied to foreign crypto exchange-traded funds, calling such products “not desirable.”
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Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.