Japan’s Financial Services Agency (FSA) is planning to tighten rules for cryptocurrencies. It aims to shift crypto regulation from the Payment Services Act to the more stringent Financial Instruments and Exchange Act (FIEA). The FSA
report, dated September 2, said that most issues in the crypto market are the same as in traditional investments.
These include unclear whitepapers, misleading information, scams, unregistered operations, low investor knowledge, and security issues on exchanges. The stricter FIEA rules would help to address these problems. Under existing rules, crypto is a financial instrument only when used in derivatives. If the Financial Instruments and Exchange Act (FIEA) is applied in full to crypto, issuers would be required to give clear information on public sales and secondary trading.
The restrictions would also apply to brokers and platforms for trading, limiting unfair trading and allowing authorities to act quickly against unregistered businesses. As per the report, crypto is rapidly influencing Japan’s economy. More than 12 million accounts exist at domestic exchanges. Total deposits exceed 5 trillion yen ($33.7 billion), which is almost one account for every 10 people.
Most Japanese traders are small-scale, as more than 80% of accounts hold less than $675. Around 7% of seasoned investors own crypto, higher than those trading in foreign exchange (FX) or corporate bonds. Around 70% of crypto owners are middle-income earners, and 86% trade with the expectation of long-term profits. Japan’s Finance Minister, Katsunobu Kato, recently stated that while crypto is volatile, it can still be included in
a diversified investment portfolio if a proper investment environment is established. He also noted that the Finance Ministry aims to create a crypto-friendly atmosphere.