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Japan’s Financial Services Agency (FSA) has published a comprehensive discussion paper regarding the classification of cryptocurrencies. The document proposes dividing digital assets into two main categories, outlining specific regulatory frameworks for each category. This initiative aims to increase market transparency and reduce information asymmetry. The agency’s statements indicate a strong commitment to investor protection and the more effective oversight of projects.
Defining Two Types of Cryptocurrencies: Purpose and Structure Distinction
According to the FSA’s proposal, cryptocurrencies will be categorized based on their fundraising methods and intended uses. The first group, referred to as “Type 1,” will consist of tokens specifically used to finance business operations. Assets within this category generally include digital assets aimed at financing new projects supported by communities.
The agency emphasizes that assets in the Type 1 category must provide clear and transparent information to investors. Detailed explanations of the project’s purpose and how the raised funds will be utilized are considered crucial for establishing a trustful environment. In this context, the principle of regulatory transparency will be structured to further increase the responsibilities of asset issuers.
The second category, defined as “Type 2,” consists of decentralized cryptocurrencies like Bitcoin 
$85,044 and Ethereum 
$1,590, which lack a specific issuer. Since these assets are not issued by any organization and do not have a fixed governance structure, the obligations for information disclosure become contentious. The FSA points out the limited applicability of traditional regulatory mechanisms for this type of asset.
Japan’s Inclusive and Gradual Regulatory Approach
This new proposal is deemed part of Japan’s increasingly mature attitude toward the cryptocurrency market. In recent years, Japanese authorities have adopted a more supportive approach, aiming to integrate cryptocurrencies into the financial system in a controlled manner rather than excluding them completely. Steps such as launching security-like investment instruments and creating exchange-based products are being taken in parallel.
The FSA also prioritizes public feedback in the regulatory process. The agency indicates that contributions from companies operating in the market, investors, and relevant stakeholders will enhance the feasibility of the proposed regulations. Open communication and a participatory approach will play a crucial role in resolving regulatory uncertainties and establishing investor confidence.
The proposed new classification system seeks to not only establish legal frameworks but also to reconstruct the transparency and accountability balances needed within the sector. Information disclosure obligations that vary by asset type could foster a more balanced flow of information in the market. This way, projects will be anchored on more solid foundations, and users will be better equipped to assess risks.
