Japan: An Introduction to FinTech Legal

Overview of Current Regulatory Framework on Tokens

Japan was the first country to establish a regulatory framework for crypto-assets. Due to this headstart, blockchain technology is now increasingly being adopted in the Japanese financial industry. For example, as of 1 September 2025, there are 28 licensed crypto-asset exchange service providers (CAESPs) in Japan.

The legal status of tokens under Japanese law is determined in accordance with their functions and uses. For example, cryptocurrency and utility tokens such as BTC and ETH are regulated as “crypto-assets” under the Payment Services Act (PSA). A business operator that engages in the business of buying, selling or exchanging crypto-assets or intermediating these activities, or in managing crypto-assets for the benefit of others (CAES), is required to undergo registration as a CAESP.

By contrast, “security tokens” – which represent shares, bonds or fund interests in tokens – are regulated under the Financial Instruments and Exchange Act (FIEA) as electronically recorded transferable rights to be indicated on securities (ERTRISs). Business operators that engage in the business of offering, handling, buying, selling or exchanging ERTRISs, or intermediating these activities, are required to undergo registration as a Type I financial instruments business operator.

In addition, tokens that constitute “stablecoins” whose prices are pegged to the value of a fiat currency and that are redeemable in fiat currency are regulated as “electronic payment instruments” (EPIs) under the PSA. The PSA also defines related intermediary activities, such as buying, selling or exchanging EPIs or the intermediation of such activities, or the management of EPIs for the benefit of others, as “electronic payment instruments exchange services” (EPIES).

Amendment Act 2025: New Licence Regime for Electronic Payment Instrument and Crypto-Asset Intermediary Service Business

In 2025, amendments to the PSA were proposed by the Financial Services Agency (FSA), resulting in the submission of the Bill for Partial Amendment to the Act on the PSA (the “Amendment Act 2025”) to the Diet on March 2025. The Amendment Act 2025 includes the introduction of new licences for business operators that engage only in intermediary services for CAES and/or EPIES. It aims to establish a new licensing system with more lenient registration requirements for businesses that solely act as intermediaries for the trading of crypto assets or EPIs. This is because current requirements for such intermediary businesses to register as full-fledged CAESPs or EPIESPs, which are subject to financial requirements and obligations under the Act on Prevention of Transfer of Criminal Proceeds, are considered excessive.

The Amendment Act 2025 defines the Electronic Payment Instrument and Crypto-Asset Intermediary Service Business (ECISB) as engaging, as a business, in any of the following acts:

• acts whereby a person other than an electronic payment instruments exchange service provider (EPIESP), upon being entrusted by an EPIESP, intermediates (for that EPIESP) the purchase and sale of EPIs or the exchange of one EPI for another; or
• acts whereby a person other than a CAESP, upon being entrusted by a CAESP, intermediates (for that CAESP) the purchase and sale of crypto-assets or the exchange of one crypto-asset for another.

FSA Discussion Paper: “Examination of Institutional Framework for Crypto-Assets and Related Matters”

In recent years, developments such as the listing of spot Bitcoin ETFs in several countries outside Japan have accelerated the treatment of crypto-assets as investment assets both in Japan and abroad. At the same time, there has been a rise in fraudulent investment solicitations, creating a growing need for more robust user protection measures. In response to these developments, on 10 April 2025, the FSA published a Discussion Paper entitled “Examination of Institutional Framework for Crypto-Assets and Related Matters” (the “Discussion Paper”) to create an environment that balances user protection with the promotion of innovation.

The Discussion Paper identifies several challenges concerning crypto-asset investments, which are categorised as follows:

• enhancing the disclosure and provision of information;
• protecting users and addressing unregistered operators;
• addressing misconduct in investment management and related activities; and
• ensuring fairness in price formation and trading activities.

Given the similarity of these challenges to those traditionally addressed under the FIEA, utilisation of existing mechanisms under the FIEA to tackle these problems is currently being considered.

Classification of crypto-assets

The Discussion Paper categorises crypto-assets into the following two types, while acknowledging the possibility of transitions between categories due to design modifications, etc.

• Type I: Fundraising/Business Activity Type (“Type I Crypto-Assets”) – these are crypto-assets issued as a means of fundraising, with the raised capital utilised for projects or other business activities. These tokens are typically issued through Initial Exchange Offerings for the purpose of funding specific projects, and the issuer is clearly identifiable. Because Type I Crypto-Assets are intended as a means of raising funds for business activities, the imposition of information disclosure obligations on issuers of Type I Crypto-Assets is now under consideration.
• Type II: Non-Fundraising/Non-Business Activity Type (“Type II Crypto-Assets”) – these are crypto-assets that do not constitute Type I Crypto-Assets, such as BTC, ETH and meme coins. In respect of Type II Crypto-Assets, regulations aimed at preventing harm caused by fraudulent solicitations are being considered.

Information disclosure and provision regulations

With regard to Type I Crypto-Assets, including those issued overseas, the Discussion Paper notes that the imposition of information disclosure obligations on issuers to provide investors with essential information (such as rules, algorithm summaries, information about stakeholders, and project details) to facilitate their investment decisions is being considered.

As for Type II Crypto-Assets, the issuers of which are often indeterminate, the imposition of obligations on CAESPs that handle such assets to explain and provide specified information on such assets to investors is being considered.

Operational regulations

The operational regulations applicable to CAESPs under the current framework, including the self-regulatory rules established by the Japan Virtual and Crypto-assets Exchange Association, are generally aligned with those for Financial Instruments Business Operators under the FIEA. Nonetheless, the Discussion Paper notes that the following new initiatives are being explored:

• elevating regulations currently set at the self-regulatory level to statutory regulations;
• introducing a more effective and stringent regulatory framework to curb illegal solicitations by unregistered operators; and
• expanding the scope of regulations to include investment management and advisory activities involving crypto-assets in spot markets.

Insider trading regulations

Under the current regulatory framework, there are no explicit provisions that directly regulate insider trading related to crypto-assets. In this regard, the Discussion Paper considers several approaches, such as introducing specific provisions similar to insider trading regulations for listed securities under the FIEA, with the aim of specifically categorising and defining the types of conduct that are prohibited.