JAPAN Trends and Developments Contributed by: Keiji Tonomura, Shu Sasaki, Kazuyuki Ohno and Otoki Shimizu, Nagashima Ohno & Tsunematsu
aries in crypto-assets would be subject to a regime equivalent to that applied to Type I Financial Instru - ments Business Operators (eg, securities firms) that intermediate highly liquid securities such as shares. In addition, as a funding source to compensate custom - ers in the event of unauthorised outflows, business operators would be required to accumulate reserve funds. Also, activities involving investment management and investment advisory services related to crypto-assets would be brought within the scope of regulation. The report also proposes introducing regulations on busi - nesses that borrow crypto-assets from users to con - duct staking. In light of incidents involving unauthorised outflows caused by cyberattacks on outsourced service pro - viders, the report proposes introducing regulation of providers of critical systems used for crypto-asset custody (including prior notifications and obligations to ensure system security). The report further notes that, with respect to decen - tralised exchanges (DEXs), the authorities will con - tinue to study appropriately calibrated, technology- sensitive regulation while monitoring developments in other jurisdictions. Third, the report proposes introducing market mis - conduct rules, including insider trading regulations applicable to crypto-assets. The scope would cov - er crypto-assets handled by domestic crypto-asset exchange service providers, regardless of whether trading occurs on centralised exchanges, DEXs, or directly between users. Examples of insider infor - mation include issuer insolvency, new listings and delistings of crypto-assets, and block or other large transactions. Persons expected to fall within the scope of regulation include affiliates of crypto-asset issuers, affiliates of crypto-asset exchange service providers, and affiliates of parties conducting large transactions. Taxation context These reforms to regulations are intertwined with a reconsideration of the tax treatment of crypto-asset transactions. At present, income arising from crypto- asset trading is subject to comprehensive taxation.
Industry groups regarding crypto-assets have long advocated for changes in tax treatment. In response, as of 2024, the tax authorities indicated a policy direc - tion of considering revisions to the taxation of cryp - to-asset transactions in tandem with establishing the necessary financial regulatory framework for investor protection. This reconsideration of taxation forms part of the backdrop to the proposed financial regulatory revisions. Next steps and timing The Japanese Financial Services Agency is preparing legislative amendments to implement these reforms. The earliest anticipated timing for submission of the amendment bill is the ordinary session of the Diet in 2026. The schedule for the amendment of laws and their enforcement depends on the response of the leg - islature and subsequent rulemaking, so it is necessary to closely monitor future developments. The Trends of Stablecoins In Japan, many companies are trying to start busi - nesses related to stablecoins. Unlike highly volatile cryptocurrencies such as bitcoin and ethereum, sta - blecoins, which are backed by fiat currencies, offer price stability, which makes them a user-friendly pay - ment method for businesses and consumers both domestically and internationally. JPYC Inc In August 2025, JPYC Inc obtained a regulatory licence as a Type II Funds Transfer Service Provider, becoming the first financial licensee for stablecoin issuance in Japan. Consequently, in October 2025, JPYC Inc commenced issuing Japan’s first yen-pegged stablecoin based on this Type II Funds Transfer Service Provider Licence. The Type II Funds Transfer Service Provider Licence is fundamentally intended for the Funds Transfer Trans - action. It is typically the licence required to provide electronic money payment services or to operate remittance intermediary services for migrant workers sending money back home. However, issuing and redeeming stablecoins in exchange for fiat currency is also considered the Funds Transfer Transaction, and
455 CHAMBERS.COM
Powered by FlippingBook