Japan’s Financial Services Agency (FSA) has initiated closed discussions on revising cryptocurrency regulations, including the possibility of classifying digital assets as securities.
Policy Direction Expected
The FSA reportedly plans to announce the policy direction for this review by June, followed by consultations with the Financial System Council, which is scheduled to meet in the fall. A potential legal amendment could be introduced by 2026, though the exact timeline remains uncertain.
Regulatory Approaches Under Consideration
The agency is debating whether to enforce existing securities laws under the Financial Instruments and Exchange Act (FIEA) or introduce new regulations under the FIEA or the Payment Services Act. It is also assessing whether these rules should apply to all cryptocurrencies or be limited to major assets like Bitcoin and Ethereum. In October, a local study group issued recommendations on spot ETFs, suggesting a priority focus on Bitcoin and Ethereum while developing necessary regulatory frameworks and applying different tax rules to ETFs and spot transactions.
Potential Impact on Venture Capital
Japan’s push towards crypto regulation could attract attention from major venture capital firms. For instance, SoftBank recently backed Cipher Mining, a cryptocurrency mining data center, and secured an option to purchase an undeveloped 300-megawatt data center site in Texas owned by Cipher. These developments coincide with SoftBank’s announcement of steady financial growth.
Japan's consideration of new regulatory measures for cryptocurrency could lead to significant changes for investors and the market as a whole.
