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Japan is moving to classify crypto assets under securities law as regulators widen scrutiny of meme coins after claims linked Prime Minister Sanae Takaichi to SANAE TOKEN. The Financial Services Agency wants to move oversight from the Payment Services Act to the Financial Instruments and Exchange Act. At the same time, the agency is weighing tougher disclosure, surveillance, and enforcement as speculative tokens draw closer attention.
The proposed shift would align digital assets more closely with traditional financial instruments. In turn, regulators say the change would reduce ambiguity and improve investor protection in retail and institutional markets. The plan also points to stronger coordination between regulators and service providers.
The FSA’s proposal would reclassify crypto assets under securities law. As a result, the agency could apply stricter market rules to trading, disclosure, and licensing across the sector.
The bill would also raise penalties for unlicensed crypto sales. Under the proposal, maximum prison terms would rise to ten years, tripling current limits for some violations.
At the same time, regulators want wider market surveillance. They are also seeking closer coordination with service providers as crypto markets mature and attract institutional interest.
A separate controversy has intensified the debate. Weekly Bunshun reported audio evidence that suggests Prime Minister Sanae Takaichi’s secretary approved the SANAE TOKEN launch.
That claim conflicts with Takaichi’s earlier denial. She said neither she nor her office knew about the token before the project surfaced publicly.
Did Takaichi’s office know about SANAE TOKEN before its launch? That question now sits at the center of the dispute as regulators review conduct around the project.
The FSA has also launched an investigation into NoBorder DAO for operating without a crypto exchange license. Soon after, the token’s operators halted issuance, adding fresh pressure to the case.
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Regulators are now focusing on information gaps between issuers and investors. In response, the FSA is discussing stricter disclosure rules for project technology, risks, and intended use.
The agency raised those concerns in its April 10 review of cryptoasset regulatory systems last year. That document gave a clearer view of how officials were reassessing oversight priorities and planning future rulemaking.
The review said Japan must balance user protection with innovation. It also examined classification frameworks that separate fundraising tokens from widely traded assets such as bitcoin and ether.
That distinction could support more targeted rules for different asset types. Meanwhile, regulators are reviewing whether current standards can address insider-like behavior and other unfair trading risks.
Japan’s regulatory direction has already moved beyond discussion. In December 2025, the Financial System Council’s Working Group recommended shifting crypto assets such as bitcoin and ether from the PSA to the FIEA.
This transition is planned for the 2026 legislation. It would apply securities-style disclosure and market integrity rules to crypto assets that now sit under payment law.
In parallel, the 2026 tax reform proposals introduced a 20% flat tax on crypto gains. That change would replace the miscellaneous income treatment and bring crypto taxation closer to that of traditional financial instruments.
Japan is moving toward stricter crypto oversight as the FSA pushes to reclassify digital assets under securities law. At the same time, the SANAE TOKEN dispute has added pressure for tighter disclosure, stronger surveillance, and better investor protection. The key takeaway is that Japan’s crypto market now faces a more regulated phase.
