Financial regulators in Japan have approved two organizations to act as digital currency associations. The Financial Services Agency (FSA), which oversees licensing and regulating businesses in the financial sectors, announced it had approved the bodies as Certified Financial Instruments and Exchange Associations. The Japan STO Association and the Japan Virtual Currency Exchange Business Association (JVCEA) are now formally recognized as self-regulatory groups for security token offerings, digital currency assets and derivative transactions. As a result, JVCEA will change its name on May 1, becoming the Japan Crypto Asset Trading Business Association in recognition of its change of status. JVCEA is currently the official body for self-regulation in the digital currency industry, with the authority to create rules and policies for digital currency exchanges operating in Japan. It currently regulates some 21 digital currency exchanges operating under license from the FSA, with a further three companies regulated as “second-class” members, including Coinbase, Tokyo Hash and Digital Asset Markets. The certification comes at a time of increasing pressure on digital currency exchanges in Japan, with both JVCEA and the FSA continuing to develop standards for the emerging industry. In particular, the issue of leverage has come to the forefront, with the FSA proposing a cut in the maximum leverage cap available for digital exchanges. It comes after JVCEA introduced a 4x maximum in 2019, though there is now pressure from some in the industry to cut this further to 2x. This would bring Japanese standards into line with rules elsewhere, including in the EU, where a 2x maximum leverage cap is already in force. The FSA is thought to be considering legislating for a cap once the amended Financial Instruments and Exchange Act comes into effect. For the time being, with two new regulatory associations operating in the digital currency sector, firms in Japan can expect to face more significant regulation and higher standards of compliance.