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Japan’s Financial Services Agency (FSA) has announced a major step toward reshaping the regulatory framework for digital assets in the country. In a proposal released this week, the agency suggested splitting crypto assets into two distinct categories, aiming to provide clearer regulatory guidance and improve investor protection.
The FSA is currently seeking public feedback on the proposal, signaling a potentially significant shift in how cryptocurrencies are governed in one of the world’s most established crypto markets.
Two Categories: Utility vs. Financial Crypto Assets
The proposed classification would divide crypto assets into:
- “Crypto-Asset-Type” Tokens – These include digital assets used primarily for payments, trading, or as a medium of exchange. Popular cryptocurrencies like Bitcoin and Litecoin are expected to fall under this category.
- “Financial-Type” Tokens – This new category would cover tokens that provide ownership, dividends, or governance rights, such as those found in decentralized finance (DeFi) projects or tokenized securities.
The move comes as Japan seeks to align its regulatory approach with the rapidly evolving nature of blockchain technology and the diverse functionalities of digital assets.
“Our goal is to ensure both innovation and consumer protection,” said an FSA spokesperson. “A more nuanced classification system will allow for more effective oversight without stifling growth.”
Why Now?
Japan has long been considered one of the most crypto-progressive countries in the world, with early regulatory frameworks and licensed exchanges in place since 2017. However, as the market has matured and diversified, regulators say that the current one-size-fits-all definition of crypto assets no longer reflects market realities.
The FSA’s latest move follows a growing trend among global regulators to separate payment tokens from investment-like tokens, particularly as DeFi continues to blur traditional boundaries in finance.
Industry Reaction
Initial responses from the crypto industry in Japan have been cautiously optimistic. Some see the proposal as a positive step toward regulatory clarity, which could attract more institutional investment and legitimize newer token models.
“It’s a smart move to distinguish between fundamentally different types of assets,” said Miko Tanaka, a Tokyo-based blockchain consultant. “This could lead to more tailored and reasonable compliance requirements.”
However, some developers and DeFi advocates are concerned that the “financial-type” classification could come with stricter scrutiny, licensing requirements, or limitations on innovation.
The FSA has opened a public consultation period, inviting industry stakeholders, academics, and the general public to weigh in on the proposed categories and their implications. Feedback will be accepted until May 10, 2025, after which the agency is expected to finalize its position and potentially introduce legislative amendments.
This move reinforces Japan’s role as a key player in shaping the future of crypto regulation — balancing technological advancement with risk management in a rapidly changing digital economy.
Japan’s proposal to classify crypto assets into two distinct types may mark a new chapter in regulatory clarity for the industry. As authorities seek public input, the global crypto community is watching closely — this framework could set a precedent for how digital assets are defined and governed worldwide.
