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    Japan’s FSA proposes tighter crypto regulations to boost investor confidence and enhance sector legitimacy

    by VT Markets
    /
    Sep 3, 2025
    Japan is considering stricter rules for cryptocurrency. The Financial Services Agency (FSA) wants to move crypto oversight from the Payment Services Act to the Financial Instruments and Exchange Act (FIEA). This change would classify cryptocurrencies as securities. It would create tougher rules for both issuers and exchanges. The FSA hopes this will cut down on bad practices and improve transparency. A proposal for this change will be presented in the next regular Diet session. At first, the tighter rules may affect Japanese crypto exchanges. However, they could also boost long-term trust and credibility in the sector. This new proposal might lead to more price fluctuations in yen-denominated pairs over the next few weeks. We expect larger price movements, especially in the BTC/JPY and ETH/JPY markets. Implied volatility on BTC/JPY options set to expire in the next 30-60 days has jumped to almost 70%. This level hasn’t been seen since early 2025, when market tensions were high. The push for stricter regulations could pressure Japanese crypto exchanges in the short term. Data from the Japan Virtual and Crypto assets Exchange Association (JVCEA) shows a 5% drop in BTC/JPY trading volumes for August 2025. This suggests some traders are starting to pull back. There may be a chance to explore bearish strategies, like buying put options or cautiously shorting futures related to the Japanese crypto market. We can look at what happened in the United States in 2023 and 2024 when the SEC stepped up enforcement. This led to initial market downturns and uncertainty for exchanges, but institutional confidence eventually increased. Japan might experience a similar journey, facing short-term challenges for the sake of long-term credibility.

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