Japan Creates a Dedicated Crypto Regulator Under Its Financial Watchdog

TL;DR

• Japan's FSA, the country's top financial regulator, has created a standalone Crypto Assets and Stablecoins Division, live as of August 7

• The division sits under a newly created bureau and has three offices: exchange monitoring, innovation promotion and digital payment planning

• In July, Japan's parliament reclassified 105 digital assets, including Bitcoin and Ethereum, as financial instruments

• The division takes over an enforcement push against unregistered offshore exchanges that has already seen Bybit and Bitget leave

Japan has created a new, standalone, Crypto Assets and Stablecoins Division as part of the FSA, Japan's Financial Services Agency, the top financial regulator in the country. This is a big regulatory upgrade for the asset class, as crypto and stablecoins have previously been a back-office unit in the FSA. 

The division sits under a newly created bureau: the Asset Management and Insurance Supervision Bureau. This oversees both the new Crypto Assets and Stablecoins Division and the Payment Services Division, as well as supervision of asset management and insurance. The new crypto focused division will have three offices under it: exchange monitoring, innovation promotion and digital payment planning. 

105 Digital Assets Reclassified as Financial Instruments

These changes are the result of a reorganization plan announced in December last year, by Finance Minister Satsuki Katayama. In July, the Japanese parliament voted to change the regulatory status of cryptocurrencies. It reclassified 105 digital assets, including Bitcoin and Ethereum, as financial instruments. Other than its regulatory status, the change will also affect how crypto profits are taxed. From 2028 they’ll be taxed at a 20% flat rate rather than the current 55% top rate tax. 

The division will also take over an ongoing enforcement push targeting unregistered offshore exchanges. The push has already seen Bybit and Bitget leave Japan. The division is live as of August 7th.

So, crypto and stablecoins are getting their own division within the FSA, their regulatory status has been updated, and spot ETFs are on the table for 2027-2028. These organizational and regulatory changes signal a big change in the Japanese government's view on cryptocurrencies. It’s firmly established in mainstream finance at this point.