Japan FSA Splits Crypto Oversight Into Standalone Division

Japan's Financial Services Agency announced Aug. 5 that it will carve cryptocurrency and stablecoin supervision out of its policy unit structure and into a standalone division, effective Aug. 7. The new Cryptocurrency and Stablecoin Division will sit under the Asset Utilization and Insurance Supervision Bureau, according to the Japanese publication NADA NEWS.

The division replaces an arrangement in which crypto work was split between the Cryptocurrency and Blockchain Innovation Office and the Cryptocurrency Monitoring Office inside the Comprehensive Policy Bureau's Risk Analysis Division. Making the unit a division rather than an office gives digital asset supervision a clearer organizational rank inside the FSA. The agency said the restructuring addresses new regulatory demands from financial digitalization and strengthens its supervision of financial institutions.

Three offices will report into the new division. The Cryptocurrency Monitoring Office keeps its existing function of supervising exchange operators. The other two units, the Innovation Promotion Office and the Digital Payment Planning Office, are newly organized and will handle financial innovation and digital payment policy.

The restructuring comes weeks after parliament approved amendments to the Financial Instruments and Exchange Act that reclassified crypto assets as financial instruments. The amendments move digital asset oversight out of the Payment Services Act, the older framework that treated crypto primarily as a payment instrument. They also introduce insider trading restrictions for crypto transactions, barring trades based on material non-public information, and annual disclosure requirements for certain issuers.

Once the new penalty provisions take effect, operating an unregistered cryptocurrency business carries a maximum prison sentence of 10 years, up from three, and a maximum fine of 10 million yen, up from 3 million yen.

Finance Minister Satsuki Katayama said the reforms are intended to strengthen market fairness and investor protection while broadening access to growth capital.

Broader policy shifts have accompanied the legal overhaul. At a financial conference in Tokyo in July, Liberal Democratic Party lawmaker Seiji Kihara said Japan's two-times leverage cap on crypto trading is too restrictive and limits market liquidity and price discovery, according to Nikkei. Kihara, who leads the party's Next Generation AI and On-Chain Finance Project Team, said relaxing the cap is part of the country's ongoing digital asset reforms. No implementation timetable has been announced.

Tax treatment is moving in the same direction. The amended law creates the legal basis for a separate tax system for cryptocurrency gains, with an effective 20% rate and a three-year loss carry-forward deduction. Earlier reporting said those provisions are expected to take effect in 2028 after the supporting regulations are completed.

The reform package also includes groundwork for domestic crypto exchange-traded funds. Nikkei reported that the FSA is preparing revisions to investment trust rules that would allow Bitcoin ETFs once the legal framework is finalized.

Enforcement against offshore platforms is already active. Bitget said earlier this month it will stop accepting new users from Japan with immediate effect, then introduce account restrictions on Nov. 1. Any remaining positions close automatically on Dec. 31, and the exchange exits the market. The withdrawal followed FSA warnings beginning in 2023 over allegedly providing cryptocurrency services without local registration. In 2025, the Kanto Local Finance Bureau warned BTG Technology Holdings Limited, which operates under the Bitget name, over unregistered online over-the-counter derivatives solicitation.

Prime Minister Sanae Takaichi has described Web3 as part of Japan's national innovation strategy. Lawmakers continue working on tax treatment and investment products while the FSA builds out its conduct rules under the revised law.