Japanese authorities seek the public’s feedback on their new crypto framework, which proposes dividing digital assets into distinct categories to facilitate regulations and find a balance between user protection and promoting innovation.
Japan Seeks Public Feedback On Proposed Crypto Regulation
On Friday, a local news outlet reported that Japan’s Financial Services Agency (FSA) unveiled its updated digital assets regulatory framework and announced it is seeking the public’s input on the proposal before May 10.
The discussion paper, aiming to review the country’s regulatory framework for crypto assets, continues the agency’s efforts to examine its regulatory system since July 2024. As Bitcoinist reported, the Japanese authorities have been working on new legislation to guarantee customer funds’ safety and establish a more reliable industry.
The FSA emphasized that developing a “well-balanced environment that protects users and promotes innovation” is necessary for the industry’s development. As a result, the regulatory agency reportedly revealed it intends to use the public’s feedback for future regulatory reviews.
According to the report, the proposed framework reviews various aspects of financial regulations, including business regulations, disclosing and providing information, and insider trading measures. However, crypto taxation was not addressed in the paper.
The proposal suggests that crypto regulations are approached under the Financial Instruments and Exchange Act (FIEA), with the FSA stating that “issues such as information disclosure, investment fraud, and fairness in price formation and trading have an affinity with issues traditionally addressed by the FIEA.”
Meanwhile, the key proposal divides crypto assets into two categories, Type 1 and Type 2, to apply distinctly different regulatory approaches to each of these categories depending on the assets’ nature.
New Division For Digital Assets Regulation
The first type is reserved for assets related to fundraising and business activities. This category covers crypto assets issued to generate funding for projects or business purposes, including some utility tokens.
The second type encompasses those digital assets that don’t fall under the first category, including many major cryptocurrencies like Bitcoin (ETH) and Ethereum (ETH),
The FSA explained regulators have a “strong need to eliminate the asymmetry of information between issuers and users regarding the purpose of use of funds raised and the details of projects, etc.,” with the first category.
As a result, the projects that fall under this category would need to disclose detailed information and the risks associated with investing in their asset.
For the second type, the regulator explained, “There are many cases where a specific issuer cannot be identified, and imposing information disclosure and provision obligations is not feasible.” Therefore, the FSA will apply regulations for type 2 assets to crypto exchanges.
The report also noted that the agency will be further developed and reference regulatory frameworks by other countries based on the feedback it receives.
Bitcoin trades at $81,819 in the one-week chart. Source: BTCUSDT on TradingView
