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BTC 
ETH The Financial Services Agency of Japan established three specialized agencies to supervise crypto exchanges, financial innovation and digital payment policies
The Financial Services Agency of Japan (FSA) established a special cryptocurrency and stablecoin department on August 7. The move follows the agency's announcement on August 5 and reorganizes the cryptocurrency regulatory function into three specialized offices.
The reorganization follows an amendment to Japan's financial law, which reclassifies Bitcoin, Ethereum and 103 other tokens as financial instruments.
The FSA establishes three specialized crypto offices
The new department replaces the previous office hierarchy responsible for cryptocurrency supervision. Previously, the Office of Cryptocurrency Regulation and the Office of Cryptocurrency and Blockchain Innovation were affiliated with the Comprehensive Policy Bureau.
The new department is now part of the Asset Management and Insurance Supervision Bureau, and has an Office of Cryptocurrency Regulation, an Office of Innovation Promotion, and a Office of Digital Payment Planning.
The FSA stated that the reorganization aims to respond to the new regulatory needs brought about by financial digitalization, and at the same time, strengthen supervision as financial technology continues to develop. It is worth noting that the Office of Cryptocurrency Regulation will be responsible for supervising cryptocurrency exchange operators, while the other two offices will handle financial innovation and digital payment policy matters respectively.
These changes are also part of a comprehensive reform of Japan's financial rules.
Cryptocurrency reclassified as a financial instrument
Japan has revised the Financial Instruments and Transactions Act to regard crypto assets as financial instruments. Previously, digital assets were mainly governed by the Payment Services Act. The revised framework introduces insider trading restrictions and additional information disclosure requirements.
The new regulations also increase penalties for unregistered cryptocurrency operators. Unregistered businesses now face up to 10 years in prison and fines of up to 10 million yen, compared with the previous maximum fine of only 3 million yen.
These changes also establish a framework for the possible launch of spot cryptocurrency ETFs on the Tokyo Stock Exchange. Finance Minister Katayama Saetsu said he would promote the review of ETF approvals.
Tax and stablecoin rules will also usher in changes
Japan also plans to reform the cryptocurrency tax policy from January 1, 2028. The proposed tax system would apply a 20% tax rate and allow losses to be carried forward. Currently, cryptocurrency gains may face an income tax rate of up to 55%.
The proposed tax rate will be consistent with the tax rate for traditional securities gains. At the same time, Mitsubishi UFJ Financial Group, Mizuho Bank and Sumitomo Mitsui Bank are participating in stablecoin trials.
Currently, only licensed banks, money transfer services and trust companies can issue stablecoins pegged to the yen. The FSA has also stepped up its crackdown on offshore platforms. Under pressure from the FSA, Bitget announced that it would phase out its services in Japan after Bybit withdrew from the Japanese market.
