Japan's Financial Services Agency (FSA) released a discussion paper on 10 April, titled 'Examining the Structure of Regulatory Frameworks Related to Crypto Assets'. The paper highlights key issues such as regulatory oversight and transparency. It also addresses insider trading prevention and industry-specific regulations, including the travel rule and staking practices.

A significant proposal in the paper is the classification of crypto assets into two categories. Type 1, Funding/Business Crypto Assets, refers to assets raised for fundraising purposes, such as some utility tokens. Type 2, Non-Fundraising/Non-Business Crypto Assets, covers assets like Bitcoin and Ethereum, which are not linked to fundraising efforts.

The FSA aims to bridge the information gap for Type 1 assets, focusing on the intended use of raised funds. However, the agency faces challenges in linking Type 2 assets to specific issuers, complicating the enforcement of disclosure rules.

Additionally, Japan's FSA plans to introduce a crypto bill by 2026, aiming to classify cryptocurrencies under traditional securities laws and subject them to insider trading regulations.