Written by: Marcus Wolter, Takahiro Miyazaki, and Crystel Saraie
What Happened?
In late February 2026, a meme coin called “SANAE TOKEN” began circulating online and was promoted as an “incentive token” for a political-adjacent project. This story has garnered widespread media attention due to the token’s branding being linked to Japan’s sitting Prime Minister, Sanae Takaichi.
On March 3, 2026, Prime Minister Takaichi denied any connection to “SANAE TOKEN,” stating that neither she nor the Prime Minister’s Office had approved or endorsed it. News coverage also indicates that Japan’s Financial Services Agency (FSA) is reportedly considering looking into the parties involved.
Legal Issues:
1. Risk of being characterized as an unregistered crypto-asset exchange business under the Payment Services Act
Under Japan’s Payment Services Act, any person engaging in the purchase and sale of crypto assets, or the exchange of one crypto asset for another, in Japan must register with the Prime Minister as a “crypto-asset exchange service provider”.
Importantly, a token may still qualify as a “crypto asset” under the Act even if it cannot be exchanged directly for fiat currency. That will be the case where, for example, it is indirectly exchangeable for a major crypto asset such as Bitcoin that is widely used as a means of payment, and where it does not fall within certain limited small-scale exceptions. Based on FSA guidance, those exceptions are generally understood in practice to cover cases involving, among other things, a total issuance of no more than one million units and a minimum unit value of at least JPY 1,000.
Any person conducting, “as a business”, the sale or exchange of such crypto assets, acting as an intermediary, broker, or agent in connection with such transactions, or providing custody of crypto assets for others, is required to register. Operating a crypto-asset exchange business without registration is subject to criminal penalties of up to three years’ imprisonment, a fine of up to JPY 3 million, or both.
According to press reports, in this case the operator itself supplied both a large quantity of the token it had issued (8% of the total supply) and its own SOL (approximately JPY 7.9 million) in order to create a trading venue, while effectively controlling and operating a framework under which exchanges of crypto assets could be conducted on an ongoing basis with an unspecified number of users. On those facts, it would appear difficult, at least at this stage, to conclude that no registration was required.
Japan’s regulatory framework in this area differs materially from the U.S. approach, and that distinction matters. By way of comparison, one well-known U.S. example of a politician-related meme coin is official $TRUMP. In a February 2025 staff statement, the SEC indicated the view that typical meme coins generally do not constitute securities and therefore do not require registration under the federal securities laws. That position is itself open to debate, but at a minimum it illustrates that, under current SEC practice, meme coins are not immediately or automatically treated as classic cases of unregistered securities.
2. Potential application of the Financial Instruments and Exchange Act
Under the Financial Instruments and Exchange Act (“FIEA”), tokens that qualify as “crypto assets” under the Payment Services Act, as well as certain specified “electronic payment instruments,” are categorized as crypto and related assets and expressly treated as a class of financial instruments. Accordingly, even where a token does not constitute a “security” in the traditional sense, such as shares or corporate bonds, it may still be subject to regulation as a financial instrument.
The full facts remain unclear at present. That said, where a token qualifies as a crypto asset under the Payment Services Act, spot trading or exchange of that token would generally fall within the Payment Services Act framework governing crypto-asset exchange services. By contrast, if margin trading, leveraged trading, or other derivatives transactions referencing that token are offered to users in Japan, registration as a Type I Financial Instruments Business Operator under the FIEA would be required.
In addition, conduct intended to artificially inflate the price of the token could give rise to market-manipulation issues under the FIEA. For that reason, any business offering derivatives tied to such a token would need highly sophisticated legal structuring and a robust compliance framework.
3. Risk of infringement of portrait rights, publicity rights, and related rights
Ms. Takaichi has denied both involvement in and approval of the project. Even so, the official website prominently features the name “SANAE TOKEN,” describes it as the “official token” of the Japan is Back project, and refers to Ms. Takaichi’s name and image.
Japanese courts recognize and protect publicity rights on the basis that the commercial value or customer-drawing power associated with a celebrity’s name or likeness constitutes an exclusive economic interest. If, therefore, the project is found to have used her name or image without authorization in order to induce purchases or participation, that could give rise to civil claims for injunctive relief and damages.
4. Risk of violating the Unfair Competition Prevention Act
Depending on the facts, the use of a person’s name or likeness may also constitute unfair competition, including an act causing confusion through the use of a well-known indication, or the unauthorized use of a famous indication, under Japan’s Unfair Competition Prevention Act.
Here, although the project includes disclaimer language stating that it is not affiliated with or endorsed by the politician, another page describes the token as an “official token.” The key legal question is therefore whether, taking the presentation as a whole, users were likely to be misled into believing that the politician herself, or her political camp, had endorsed the project. A disclaimer alone does not automatically eliminate that risk.
5. Reaction in Japan & Lesson for Crypto Asset Service Provider
The reaction to Sanae Token in Japan has, on the whole, been negative. Although the project invoked the name of a nationally prominent serving politician, she expressly denied any involvement, and the result was that the project came to be seen not as a legitimate expression of political support but as a problematic initiative carrying a serious risk of misleading the public.
Media coverage has consistently framed the matter in terms of controversy, damage control, and official scrutiny. The crypto community in Japan has likewise tended to view the project as lacking transparency and raising substantial concerns about the operator’s credibility.
In addition, on March 5, the Financial Services Agency updated its warning titled, “It’s a scam! Beware of investment solicitations on social media!”, which can also be read as a cautionary notice issued in light of this matter.
Example:
- Case in which users are directed from a website pretending to be a government-authorized investment program
Characteristics:
- Fake news is created using images of government officials or celebrities to invite people to invest in a specific investment program.
- Solicitations are made by falsely claiming things such as “government-authorized” or “licensed by the FSA,” thereby making it appear as though the government or administrative agencies are recommending transactions with a specific company.
By disregarding Japan’s legal regulations and social climate, the Sanae Token initiative has generated an extremely negative situation. Anyone seeking to conduct a crypto-asset business in Japan will likely find it difficult to succeed unless they comply with the various applicable regulations and respect the local culture.
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