Japan Proposes Two-Tier Crypto Framework in Push for Smarter Regulation

Japan is preparing to reshape its crypto regulations with a fresh proposal that would divide digital assets into two distinct categories—one for business-backed tokens and another for decentralized cryptocurrencies like Bitcoin.

The country’s Financial Services Agency (FSA) released the draft framework this week, opening the door to public feedback until May 10, 2025.

The new approach aims to bring clarity to a fragmented regulatory environment. Under the plan, tokens used for fundraising or issued by businesses—often lesser-known altcoins—would face stricter rules around transparency, investor protection, and disclosure. Projects would need to outline how funds are used and disclose potential risks. If they reach a significant investor base, they may fall under security token laws.

In contrast, widely held decentralized tokens such as Bitcoin and Ethereum would not be regulated at the asset level. Instead, crypto exchanges would bear responsibility for market monitoring, including reporting sharp price movements.

READ MORE:

Experts Question Trump’s Tariff Move: Temporary Relief or Deeper Uncertainty?

While the paper avoids the thorny issue of taxation, it lays the groundwork for more formal recognition of crypto within Japan’s financial system. Regulators are also considering broader changes to financial laws by 2026 that could redefine digital assets as investment products rather than just payment tools.

The proposal reflects a shift in tone from Japan’s traditionally cautious stance. A possible lifting of the crypto ETF ban is also in discussion, signaling that Tokyo is increasingly open to embracing digital assets under tighter safeguards.

Alexander Stefanov