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The Financial Services Agency of Japan (FSA) has proposed to intensify penalties for unlicensed cryptocurrency trading and to equate crypto assets with traditional financial instruments such as stocks, bonds, and derivatives.
Under the initiative, the maximum prison sentence for offenders could be increased more than threefold—from three years to ten years. The proposed fines are also set to rise from 3 million yen (approximately $20,000) to 10 million yen (around $67,000).
The FSA has also suggested altering the status of registered market participants: instead of being labeled as “crypto asset exchange service providers,” they will be categorized as “organizations trading in crypto assets.” Their operations are expected to be regulated under Japan’s Financial Instruments and Exchange Act.
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Previously, the FSA limited its actions to warnings directed at unregistered operators, while the Securities and Exchange Surveillance Commission (SESC)—an independent agency under the FSA—could seek court injunctions against their activities. Now, there is a proposal to expand the SESC’s authority to allow its involvement in criminal investigations related to unlicensed crypto companies.
It is anticipated that the commission will be able to participate in conducting searches, seizing evidence, and forwarding materials to the prosecution. Currently, the SESC holds such powers in cases of securities fraud and insider trading.
The tightening of regulations will impact not only illegal spot trading of cryptocurrencies but also companies that operate with over-the-counter crypto derivatives without a license.
This initiative is being discussed in light of a recent scandal involving the meme coin SANAE based on Solana, launched by the NoBorder DAO community in honor of Japan’s Prime Minister Sanae Takaichi. In early March, the token’s value dropped nearly 60%—from $0.0137 to $0.0058.
