JAPAN Law and Practice Contributed by: Keisuke Hatano, Takeshi Nagase, Takato Fuki and Tomoaki Katayama, Anderson Mori & Tomotsune
trading. In light of international developments and to ensure fair trading, the Amendment Bill to the FIEA will establish a regulatory framework for insider trading in crypto-assets based on the framework for listed securities. Specifically, the amendments will prohibit persons in a special position (insiders) with access to “material facts” from engaging in trading or similar activities prior to the public disclosure of such facts. Specifically, Article 171-7, paragraph 1 of the Amend- ment Bill of the FIEA stipulates that persons related to a specified crypto-asset issuer (eg, officers of a speci- fied crypto-asset issuer) who have become aware of material facts concerning specified crypto-assets, etc, may not, until after the public disclosure of such material facts, engage in trading or other transactions involving such subject specified crypto-assets until such material facts have been publicly disclosed. 2.6 Non-Compliance In 2018, following the leakage of users’ crypto-assets worth approximately USD530 million from a cyber- attack on one of the biggest CAESPs, the JFSA con- ducted sweeping on-site inspections of registered and provisional CAESPs. This was followed by the JFSA’s announcement on 8 March 2018 that it was impos- ing business suspension orders on two provisional CAESPs and business improvement orders on two registered CAESPs and three provisional CAESPs. After further review, the JFSA also imposed business improvement orders on six additional major registered CAESPs on 22 June 2018. In addition, on 21 June 2019, the JFSA imposed a business improvement order on a CAESP for inadequacies in its business management, AML/CFT and risk management sys- tems, among other things. On 10 November 2022, FTX Japan received an administrative disposition from the JFSA, including a business suspension order and a business improve- ment order, amid the financial difficulties experienced by its parent company, FTX Trading Limited. On 11 November 2022, FTX Trading and its group compa- nies filed for Chapter 11 bankruptcy protection under the US Federal Bankruptcy Code. The filing included FTX Japan and its parent company, FTX Japan Hold- ings. More recently, on 26 September 2024, the JFSA issued a business improvement order to a registered
CAESP in response to the unauthorised outflow of approximately 4,500 BTC. It cited serious deficiencies in system risk and information security controls and measures to prevent these incidents (eg, centralised key management and insufficient wallet diversifica- tion). Additionally, the JFSA has been issuing warnings to CAESPs (including offshore entities) that offer servic- es to residents of Japan without registering with the JFSA, instructing them to cease these activities imme- diately. In 2023, the JFSA announced it had issued four of these warnings and in 2024, it announced it had issued six. Furthermore, according to media reports, in early February 2025, the JFSA requested that Apple and Google remove the mobile applications of the five exchanges that had been the subject of the 2024 warnings from their Japan-facing app stores and both platforms complied. The JFSA’s enforcement stance is expected to remain consistent in principle going forward. However, the impact of the above amendment to the FIEA on this enforcement stance should continue to be monitored. 3. Licensing and Set-Up Requirements 3.1 Licensing Requirements As described in 2.2 Crypto-Asset Regulatory Frame- works , under the PSA, a person who, as a business, engages in: • the purchase and sale of crypto-assets or the exchange of crypto-assets for other crypto-assets; • the intermediary, brokerage or delegation of such acts; • the management of users’ money in connection with these acts; or • the management of crypto-assets for the benefit of another person, is required to register as a CAESP. The registration requirement applies to operators that provide CAES to residents of Japan, regardless of where the operator itself is located. Accordingly, even an overseas operator without a physical presence in
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