Japan Just Split Crypto in Two. One Track Goes to Securities Law. Stablecoins Aren't On It.
Japan's cabinet approved a draft amendment on April 10 that moves cryptocurrencies from the Payment Services Act to the Financial Instruments and Exchange Act — the same framework governing stocks and bonds. Insider trading is now banned. Penalties for unregistered sales jump from 3 years to 10. Annual disclosures become mandatory.
But here's the part most coverage missed: stablecoins aren't moving. They stay under the Payment Services Act, regulated as electronic payment instruments. Japan just built a two-track system — and the tracks are heading in opposite directions.
What Changed: Crypto Gets the Securities Treatment
The amendment brings roughly 105 tokens listed on Japanese exchanges under FIEA oversight. The Securities and Exchange Surveillance Commission gets expanded enforcement powers, including surcharge authority. Exchange operators get a new title: "crypto asset trading operators." The whole package reads like Japan looked at its 2017 post-Mt. Gox framework and decided it wasn't strict enough.
Finance Minister Satsuki Katayama framed it as growth policy: expanding "the supply of growth capital" while ensuring "market fairness, transparency, and the protection of investors." If the bill passes the current Diet session, it takes effect in fiscal 2027.
What Didn't Change: Stablecoins Stay in the Payments Box
Fiat-pegged stablecoins remain classified as electronic payment instruments under the Payment Services Act. Only three entity types can issue them: licensed banks, trust companies, and registered fund transfer service providers. Reserves must be 1:1 in yen deposits or government bonds. The FSA oversees everything.
This framework is already live. JPYC registered in August 2025 as the first licensed yen-pegged stablecoin issuer, operating on Ethereum, Polygon, and Avalanche with 100% reserves in yen deposits and government bonds. Circle launched USDC on SBI VC Trade in March 2025, with plans to expand to Binance Japan, bitbank, and bitFlyer. Three megabanks — MUFG, SMBC, and Mizuho — are building their own yen stablecoins on MUFG's Progmat platform.
Why the Split Matters
Most countries are building one framework to cover everything. The US Clarity Act bundles market structure and stablecoin provisions together. The EU's MiCA covers both under one roof. Japan is deliberately separating them.
The logic: stablecoins that maintain a 1:1 peg and function as payment instruments don't behave like securities. They don't appreciate. They don't have insider information dynamics. Regulating them under securities law would impose disclosure and trading requirements designed for volatile assets on instruments that are supposed to be boring.
The risk: if a stablecoin issuer starts offering yield or governance features, the line between "payment instrument" and "financial product" blurs. Japan's framework assumes stablecoins stay simple. The market doesn't always cooperate.
What to Watch
Tax reform is the sleeper issue. Officials have floated a flat 20% capital gains rate for qualifying crypto transactions, replacing the current progressive rate that can hit 55%. If that passes alongside the FIEA amendment, Japan becomes significantly more attractive for crypto capital — and the stablecoin rails being built by Circle, JPYC, and the megabanks become the on-ramp.