2025 marked a turning point for digital-asset regulation. Major jurisdictions across the world drew explicit distinctions between protocol infrastructure and financial products. That momentum continues into 2026. Next we highlight Japan.
Japanese Market Regulatory Pulse
Japan currently has over 13 million verified cryptocurrency users, with more than $34 billion in digital assets held under local custody. User penetration is projected to reach 18.7 million by 2026. The scale of the market being regulated is substantial. Japan’s Finance Services Agency (FSA) is building a framework for one of the world’s most developed retail and institutional crypto markets.
The country has long been regarded as one of the more progressive regulatory environments for digital assets. Japan was among the first major economies to establish a formal licensing regime for cryptocurrency exchanges following the 2014 Mt. Gox collapse and the 2018 Coincheck hack, and its FSA has since built a reputation for measured, iterative rulemaking. That measured approach, however, is now giving way to something far more ambitious.
In November 2025, the FSA’s Financial System Council Working Group, convened across six sessions beginning in June 2025, released a draft report (Working Group Report) proposing to fundamentally restructure how Japan regulates digital assets. The centrepiece of that proposal is a migration from the Payment Services Act (PSA) to the Financial Instruments and Exchange Act (FIEA).
The implications are sweeping. Exchanges and custodians will face heightened licensing and operational obligations. Token issuers will be subject to disclosure regimes modelled on securities law. Lending and yield-generating services will fall squarely within the regulated perimeter.
The legislative timetable calls for the introduction of new laws reflecting the proposals in the Working Group Report in 2026, with implementation expected as early as spring 2027.
From the Payment Services Act to the Financial Instruments and Exchange Act
Moving digital assets under the FIEA is a meaningful shift in how Japan thinks about these assets. Under the PSA, cryptoassets were treated primarily as a means of payment, a framing that made sense in the early years of Bitcoin and Ethereum, but that has grown increasingly strained as the asset class has matured into a vehicle for investment, speculation, and institutional portfolio allocation.
The FSA’s Working Group concluded that the FIEA’s architecture, built around disclosure obligations, market integrity rules, and robust enforcement powers, is better suited to the realities of today’s digital asset market. The shift is also intended to align Japan with international norms: the European Union’s MiCA framework, the United States’ proposed CLARITY Act, the United Kingdom’s evolving crypto regulatory regime, and similar frameworks in other jurisdictions are all moving in the direction of treating cryptoassets (other than stablecoins) broadly as financial products rather than a payment rail.
The reform also comes alongside a proposal to reduce the capital gains tax on digital asset investments from the current rate of up to 55% to a flat 20%, aligning crypto taxation with the treatment of listed equities. The combination of more structured market oversight and a materially lighter tax burden could catalyse a significant increase in institutional and retail participation in Japan’s digital asset markets.
How This Relates to Staking
The Working Group Report specifically calls out that any activity where an entity borrows cryptoassets from retail users in order to stake or re-lend those assets during the time that such assets are borrowed should be within the scope of FIEA regulation. Given that the Working Group Report focuses on the borrowing aspect and not the actual staking aspect, the question remaining is how the FIEA will choose to treat staking-as-a-service providers like Figment.
Since borrowing in this context means that the relevant entity will also take custody of the cryptoassets in the above scenario, the general market view is that the FSA is expected to focus on the custodial aspect of staking and, that non-custodial infrastructure providers will remain outside of the regulatory perimeter. This view was also endorsed at a recent learning session put on by the Japan Cryptoasset Business Association (JCBA): registration obligations are expected to apply to entities with custodial staking or lending services, not to technical service providers operating in a purely infrastructure capacity.
Conclusion
Japan’s emerging approach to staking appears to be aligning with a broader international trend that regulators are drawing a conceptual line: custody triggers regulation, while pure infrastructure provision does not.
For Figment and institutions considering staking in Japan, this emerging international alignment is an encouraging signal. The regulatory treatment of non-custodial infrastructure providers remains outside the scope of licensing obligations across the major frameworks surveyed, and Japan’s approach under FIEA appears set to follow suit. While some uncertainty remains pending final FSA guidance, the direction of travel — both domestically and globally — points toward a clear regulatory perimeter that excludes pure technical service providers operating without custody of client assets.
