The implications of this move are far-reaching. With the official classification of cryptocurrencies as financial assets, they would become subject to insider trading regulations. This means that any trades based on non-public information would be strictly prohibited. According to the report, the FSA is likely to present this legislative proposal to the parliament as soon as 2026.

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Though the FSA made this request in the previous week, Apple pulled these apps from its App Store on February 6, barring Japanese customers from downloading them, as reported by Nikkei on February 7.

Japan’s approach towards cryptocurrency has been more conservative compared to other Asian markets. While Hong Kong approved the first spot Bitcoin (BTC) and Ether (ETH) exchange-traded funds (ETFs), Japanese officials remain cautious about the potential volatility and risks linked to crypto ETFs.

The FSA’s move to restrict downloads of unregistered crypto exchanges is not an outright clampdown against cryptocurrency investing, industry experts suggest.

As Anndy Lian, a renowned author and intergovernmental blockchain expert remarked to Cointelegraph, “This is not about turning off crypto investment. It’s about setting boundaries and declaring that if you want to participate in our market, you must abide by our rules.”

The FSA’s regulatory action comes about five months after it introduced a new tax reform for 2025 that will treat cryptocurrencies as traditional financial assets. Japan’s rigorous regulatory landscape is not an attack on crypto, but a means to ensure investor safety and accountability, Lian added.

The infamous Mt. Gox Bitcoin exchange, based in Tokyo, collapsed in 2014 following a massive hack, causing losses of over $9.4 billion for more than 127,000 investors. In a significant step towards mainstream acceptance, Mt. Gox completed 41.5% of its Bitcoin distribution to creditors on July 30, 2024, distributing a total of 59,000 Bitcoin.

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A CoinPost story claims that the country’s Financial Services Agency would revise Cabinet Office rules and publish guidelines for the use of the aforementioned stablecoins in 2023, therefore, lifting the prohibition on their usage and circulation. In accordance with the upcoming “Revised Payment Services Act,” which is scheduled to take effect in 2023, new rules and standards will be implemented at that time.

FSA Will Impose Per-Transaction Cap of $7.5k for Money Transfers

A maximum of one million Japanese yen, or around $7,500, may be sent in a single transaction when utilizing stablecoins for remittances.

Japanese stablecoin distributors will also be obligated to safeguard assets and provide enough collateral. The same distributors that facilitate transactions in stablecoins will also follow rigorous anti-money-laundering and know-your-customer policies.

Preparations Are Being Made for Web3 in Japan

After the Terra ecosystem collapsed in June, sending its algorithmic stablecoin of UST to zero, Japan acted swiftly to adopt stablecoin legislation. Therefore, the Japanese Parliament had originally agreed on a law that would have prohibited non-banking entities from issuing stablecoins. Stablecoins were intended to be issued and distributed only by banks and other reputable financial organizations.

Originally scheduled to go into effect in 2023, the legislation is now being reconsidered in light of the Japanese government’s apparent enthusiasm for Web3 adoption.

Japan’s Prime Minister Fumio Kushida made an announcement favoring NFTs, the Metaverse, and the Web3 sector as a whole at the beginning of October. Prime Minister Kushida also emphasized the need of enlisting and keeping on board local entrepreneurs who are developing Web3 ventures. Therefore, companies have the opportunity to grow in value thanks to the digital space.

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