Japan to Toughen Penalties on Unregistered Virtual Asset Sellers...Prison Terms of Up to 10 Years

The Financial News, Tokyo — Correspondent Seo Hye-jin — Japan’s financial authorities will impose tougher penalties for legal violations in Virtual Asset trading. Prison sentences for businesses that sell Virtual Assets without registration will be raised from the current maximum of three years to up to ten years, and fines will increase from up to 3 million yen to up to 10 million yen. The move is intended to clearly signal a stronger commitment to investor protection.
According to Nihon Keizai Shimbun (The Nikkei) on the 17th, the Financial Services Agency of Japan plans to soon submit amendments to the Financial Instruments and Exchange Act and related laws to an extraordinary session of the National Diet of Japan. At present, Virtual Asset regulations are contained in the Payment Services Act, but the agency intends to transfer them to the Financial Instruments and Exchange Act and at the same time tighten penalties.
Once the law is revised, the penalty level will be significantly raised to "imprisonment for up to 10 years or a fine of up to 10 million yen," or both. In addition, the designation for registered businesses will be changed from the current "Virtual Asset exchange service providers" to "Virtual Asset trading service providers."
The enforcement framework will also be strengthened. The Securities and Exchange Surveillance Commission will newly include Virtual Asset-related violations among the targets of its "penal investigations," under which it can conduct on-site inspections and seize evidence with a view to filing criminal complaints.
In Japan, disputes over highly speculative memecoins have been mounting alongside the spread of blockchain technology.
Recently, allegations emerged that an unregistered operator issued and sold a Virtual Asset called the "SANAE token (SANAE TOKEN)," named after Prime Minister Sanae Takaichi. The Financial Services Agency of Japan has launched a fact-finding inquiry into the case.
The SANAE token is a Virtual Asset launched on the 25th of last month by Japanese entrepreneur Yuji Mizoguchi. It features an illustration of Prime Minister Takaichi and promotional phrases urging investment, describing it as "not just a simple memecoin, but Japan’s hope."
The token was initially priced at 0.1 yen (about 0.001 dollars), but it surged to 2.6 yen (about 0.026 dollars), riding on the high approval ratings of the Takaichi cabinet.
As controversy grew, Prime Minister Takaichi wrote on her social media account X (formerly Twitter) on the 4th, "It seems there is some misunderstanding because of the name," adding, "I have absolutely no knowledge of this token. My office has not been informed about it either. I have not given any form of approval, so I ask that people not be misled."
After Prime Minister Takaichi denied any connection, the token’s price plunged, prompting a wave of complaints from investors. As news spread that the Financial Services Agency of Japan was considering an investigation, Yuji Mizoguchi announced on the 6th, "We will discontinue the issuance of the SANAE token."


sjmary@fnnews.com Seo Hye-jin Reporter