Japan is taking another major step in cryptocurrency regulation by creating a dedicated Cryptocurrency and Stablecoin Division within its Financial Services Agency (FSA).
According to reports, the new division will officially begin operations on August 7 and will oversee cryptocurrency regulation, stablecoin supervision, digital payment policy, and financial innovation under one department.
Previously, crypto-related responsibilities were handled by separate offices within the FSA. By creating a standalone division, Japan is giving digital asset oversight a higher level of importance within its regulatory structure.
The new department will operate under the Asset Utilization and Insurance Supervision Bureau and will include three specialized units:
- The Cryptocurrency Monitoring Office, which will continue supervising crypto exchanges.
- The Innovation Promotion Office, focused on financial technology development.
- The Digital Payment Planning Office, responsible for digital payment policies and related initiatives.
The FSA said the restructuring is designed to strengthen oversight as financial technology evolves and digital assets become a larger part of the financial system.
The move follows major legal reforms approved in Japan earlier this year. The country recently amended its Financial Instruments and Exchange Act, officially reclassifying cryptocurrencies as financial instruments rather than simply payment tools.
The updated law also introduced insider trading restrictions for crypto markets, making it illegal to trade based on material non-public information.
In addition, some crypto issuers will now face annual disclosure requirements to improve transparency, while penalties for operating unregistered crypto businesses have been significantly increased.
Under the new rules, the maximum prison sentence for operating an unregistered cryptocurrency business will rise from three years to ten years, while the maximum financial penalty will increase from 3 million yen to 10 million yen.
Japanese officials say the reforms are intended to improve investor protection, increase market transparency, and strengthen confidence in the growing digital asset sector.
Japan has also continued exploring broader crypto reforms. Policymakers have discussed easing restrictions on leveraged cryptocurrency trading, arguing that current limits may reduce market liquidity and trading activity.
The country is also working toward a separate tax framework for cryptocurrency investments. Proposed changes include a 20% tax rate on crypto gains and the ability to carry losses forward for up to three years. These measures are expected to take effect after additional regulations are finalized.
At the same time, regulators are preparing the groundwork for potential cryptocurrency exchange-traded funds (ETFs), including products linked to Bitcoin.
The launch of the new Cryptocurrency and Stablecoin Division comes as Japan continues tightening enforcement against companies operating without local approval.
Earlier this month, crypto exchange Bitget announced plans to stop accepting new users from Japan and gradually exit the market following regulatory pressure related to registration requirements.
Despite stricter oversight, Japan continues to support blockchain and digital asset development. Government officials have repeatedly identified Web3 and blockchain technology as important parts of the country’s long-term innovation strategy.
The creation of a dedicated crypto and stablecoin division signals that Japan is moving toward a more structured and comprehensive approach to regulating the digital asset industry while continuing to support its growth.
