Nikolas Sargeant
Japan's Financial Services Agency (FSA) has released a discussion paper that proposes dividing cryptocurrency assets into two distinct categories and is actively seeking public input on this potential regulatory framework.
The FSA published "Examining the Structure of Regulatory Frameworks Related to Crypto Assets" on April 10th, requesting public feedback by May 10th. The paper addresses several critical regulatory concerns, including appropriate oversight levels, transparency requirements, industry-specific regulations, market access rules, and anti-insider trading measures.
Business vs. Non-Business: The Two Proposed Crypto Categories
The cornerstone of the proposal is a two-category classification system for digital assets. Type 1, designated as "Funding/Business Crypto Assets," encompasses tokens created primarily for fundraising purposes, with capital directed toward specific projects. Many utility tokens would fall into this category.
Type 2, labeled "Non-Fundraising/Non-Business Crypto Assets," includes cryptocurrencies that don't function as fundraising instruments or business assets. Major cryptocurrencies like Bitcoin and Ethereum would be classified in this group.
The FSA emphasized that Type 1 assets require addressing significant information asymmetry between issuers and users, particularly regarding fund allocation and project details. For Type 2 assets, the agency acknowledged the regulatory challenge of linking these cryptocurrencies to specific issuers, which complicates enforcement of disclosure requirements.
Regulatory Overhaul: FSA Plans Crypto Legislation for 2026
According to earlier reports, Japan's financial regulator intends to introduce legislation to parliament as early as 2026 that would amend existing crypto regulations.
If approved, the changes would reclassify cryptocurrencies into the same legal category as traditional securities, subjecting them to established insider trading regulations that prohibit using non-public information for personal gain.
Currently, digital assets operate under a separate regulatory framework with minimal oversight on trading practices that would be considered illegal in conventional financial markets.
