Japan’s Financial Services Agency (FSA) is implementing stricter regulations for cryptocurrencies. It aims to move cryptocurrency regulation under the more stringent Financial Instruments and Exchange Act (FIEA), instead of the existing Payment Services Act. The FSA report, released on September 2nd, highlights common issues in the crypto market that mirror traditional investments. These include unclear whitepapers, misleading information, scams, unregistered operations, low investor knowledge, and security concerns on exchanges. The FIEA’s stricter guidelines will address these challenges. Currently, crypto is classified as a financial instrument only when used for derivatives. However, applying full FIEA rules would require issuers to provide clear information about public sales and secondary trading. These restrictions also apply to brokers and platforms involved in trading, aiming to prevent unfair practices and enable swift action against unregistered businesses. Crypto’s Impact on Japan’s Economy Japan is witnessing rapid crypto adoption with over 12 million accounts at domestic exchanges. Total deposits exceed 5 trillion yen ($33.7 billion), equivalent to almost one account for every ten people in the country. Most Japanese traders are small-scale, with 80% holding less than $675. A smaller portion of seasoned investors hold crypto (7%), higher than those trading in foreign exchange (FX) or corporate bonds. Around 70% of crypto owners belong to the middle income bracket, and 86% trade with long-term expectations. Japan’s Finance Minister, Katsunobu Kato, recently stated that while volatile, crypto can be included in a diversified portfolio if proper investment environments are established. The Ministry is also working to create a crypto-friendly environment.