Japan officially established the Crypto and Stablecoin Division under its financial services agency (FSA) on August 5, 2026. Effective starting August 7, this independent division operates under the Asset Management and Insurance Supervision Bureau. This reorganization dismantles the old structure, which only placed crypto matters at the office level under the risk analysis division.
Digital assets now have their own dedicated supervisory desk. This new division oversees three separate pillars: the Crypto Monitoring Office to supervise exchange operations, the Innovation Promotion Office focusing on financial technology, and the Digital Payments Planning Office.
Filtering Out Bad Actors, Raising Penalties
This bureaucratic overhaul comes shortly after the Japanese government approved amendments to the Financial Instruments and Exchange Act. The new rules officially classify crypto assets as full financial instruments - a legal move that carries sharp consequences for violators.
Unlicensed business operators now face a maximum prison sentence of 10 years, a significant jump from the previous limit of only three years. The maximum fine has also been raised from three million yen to 10 million yen. The amendment also bans insider trading practices for crypto transactions and requires certain token issuers to submit regular annual reports.
The local authorities’ firmness has already directly claimed victims among foreign exchanges. Responding to repeated warnings from the FSA since 2023, Bitget recently announced it will stop accepting registrations from new users in Japan and is preparing to close all open positions of local customers by December 31.
Easing Behind the Tightening
Despite the increased penalties, Japan is still trying to formulate market-friendly policies. The FSA is currently preparing revisions to investment rules that could potentially pave the way for the launch of the country’s first domestic spot Bitcoin ETF products.
The rules of the crypto trading game, which have been considered restrictive, are also being reconsidered. Seiji Kihara, a lawmaker from the ruling LDP, stated that the current maximum crypto leverage limit of 2x is too strict. This limit is under review to be relaxed so that domestic exchanges can compete to attract transaction volume.
When Will Crypto Tax Be Revised?
The regulatory issue most anticipated by retail investors is in the taxation sector. The crypto tax reform currently being prepared by the government could potentially apply an effective tax rate of 20%, complete with a loss carry-forward facility of up to three consecutive years. If approved, the new tax rules are expected to take effect in 2028.
For crypto market participants in Japan, the rules of the game are now clearly divided. Those who comply with regulation will get more room for innovation, while those who ignore licensing must prepare to face a decade of imprisonment.
Reported from crypto.news.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
