What happened?
Japan is planning to regulate cryptocurrencies under its Financial Instruments and Exchange Act (FIEA), marking the most extensive regulatory change in the sector since the nation adopted crypto trading. The move aims to close legal gaps, protect investors, and combat unregistered operators rampant in the market.
Who does this affect?
This decision primarily affects retail investors who represent a significant portion of Japan’s crypto market, accounting for over 80% of accounts holding less than ¥100,000 ($670). It also impacts crypto exchanges, which will now operate under more stringent regulations and disclosure requirements. The new law would treat fundraising tokens and decentralised assets like Bitcoin and Ether differently, imposing specific duties on issuers and platforms respectively.
Why does this matter?
Japan’s planned regulation holds considerable market implications, largely contributing to safeguarding the interests of investors, particularly small-scale ones, and enhancing the overall transparency and fairness of cryptocurrency trading. As part of the proposed changes, courts will be authorised to issue emergency injunctions against unregistered operators and introduce significant fines and imprisonment sentences for violators. This development aligns Japan with global efforts to bring digital assets under traditional financial oversight.