The Japan Financial Services Agency’s Financial Services Council approved five working group reports that set out a package of planned reforms spanning regional financial institution policy, crypto assets, securities market enforcement, sustainability reporting and broader corporate disclosure rules. The reports outline a shift to treat crypto assets more explicitly as investment products under the Financial Instruments and Exchange Act, tougher tools to deter and investigate unfair trading, and a phased move to Sustainability Standards Committee of Japan standards with mandatory third-party assurance for prime-market listed companies. For crypto assets, the report proposes moving the core legal framework from the Funds Settlement Act to the Financial Instruments and Exchange Act, positioning crypto assets as financial instruments distinct from securities and tightening user protection through stronger disclosure, conduct and security requirements. It envisages issuer- or exchange-led disclosure obligations depending on whether there is an identifiable issuer and whether fundraising occurs, timely disclosure of events material to trading decisions, and sanctions and civil liability for false statements and non-disclosure, supported by stronger review functions within exchanges and self-regulatory bodies including greater independence. Business rules would broadly mirror current exchange-operator requirements (including cold-wallet management in principle), extend regulation to crypto-related investment management and advice, and introduce insider trading rules for crypto assets alongside enhanced surveillance and enforcement capacity at the Securities and Exchange Surveillance Commission. Separately, the Market System Working Group report recommends expanding tender offer insider trading coverage (including certain contractual counterparties), recalibrating and increasing surcharge levels (including for large shareholding reporting breaches and high-speed trading manipulation), adding penalties targeting the use and provision of third-party accounts, introducing a cooperation-based surcharge reduction mechanism, and expanding investigative powers to support international cooperation and address unregistered operators. On corporate disclosure, the sustainability report recommends mandatory application of Sustainability Standards Committee of Japan standards in securities reports for prime-market issuers on a market-capitalisation schedule (JPY 3 trillion and above from the fiscal year ending March 2027, JPY 1 trillion to below JPY 3 trillion from the fiscal year ending March 2028, and JPY 500 billion to below JPY 1 trillion from the fiscal year ending March 2029), with mandatory third-party assurance starting one year after each cohort’s disclosure obligation begins and a registration regime for assurance providers under the Financial Instruments and Exchange Act. The Disclosure Working Group also recommends raising the exemption threshold for securities report filing from JPY 100 million to JPY 500 million, extending the simplified “small offering” framework to offerings from JPY 500 million to below JPY 1 billion, widening access to professional-only trading venues for qualifying individuals who have not completed opt-in procedures (with investor-protection conduct rules applied), expanding stock-compensation disclosure exemptions beyond listed shares, and introducing a safe harbour to limit civil and administrative liability for certain forward-looking sustainability disclosures where specified conditions are met. For regional finance, the council-endorsed report supports measures to help regional institutions contribute to local company value creation and regional problem-solving and flags the need to extend and expand time-limited capital participation and fund grant schemes under the Financial Function Enhancement Act that are due to expire at end-March 2026; the agency also indicated it plans to submit legislation at the upcoming special Diet session to revise the Act.

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