Japan is preparing to reassess its cryptocurrency regulations, as reported by Bloomberg on Monday. The review will focus on the effectiveness of the current framework, which regulates crypto under the payments act. This evaluation is expected to unfold over the coming months and could result in significant adjustments to the regulation of digital assets in the country.

The Financial Services Agency (FSA) is spearheading this review to determine if existing regulations sufficiently protect investors. The findings may indicate the need for amendments to the payments act or suggest that cryptocurrencies should be classified as financial instruments, thus subjecting them to Japan’s investment law. Such changes might also pave the way for reduced taxation on digital assets, a consideration that Japan has been exploring.

Globally, countries are striving to clarify their regulatory positions on cryptocurrency. For instance, the U.K. officially classified crypto as a regulated activity last year, integrating it into its financial services framework. In Europe, the Markets in Crypto Assets (MiCA) rules have been established to govern the sector, while South Africa has recently opened its licensing process for cryptocurrencies.

CoinDesk has reached out to the Financial Services Agency for additional insights.