Selling Game Tokens to US Players: A Guide for Japanese Publishers

The Scenario

A Japanese game publisher has built a blockchain game with a native fungible token. US players will be able to buy the token with real money, use it inside the game to acquire items and access features, earn additional tokens through gameplay, and trade the token on secondary markets, including for fiat currency.

Japanese counsel will handle the domestic launch under the Payment Services Act (“PSA”), which governs crypto asset exchange services, and the Financial Instruments and Exchange Act (“FIEA”), which governs security tokens, including any registration with the Financial Services Agency (“FSA”) required under either regime. This article addresses the U.S. legal questions that must be answered before the first American player can lawfully buy a token.

There are three core questions: (1) Is the token a security? (2) Does the publisher have to register as a money transmitter? (3) Does the token-earning mechanic create gambling law exposure?

The analysis below assumes the specific fact pattern in the scenario: a fungible token that can be earned through gameplay and traded for fiat on secondary markets. A different architecture (closed-loop tokens, soulbound tokens, NFT-only items, or tokens with no fiat off-ramp) will change the analysis in each section.

1. Is the Token a Security?

The SEC’s March 17, 2026 interpretive release is the most authoritative recent Commission statement on the application of the federal securities laws to crypto assets, including game tokens.[1] The release is interpretive guidance and not a rule. It represents the Commission’s current analytical framework and is influential in practice, but it does not bind courts, and the underlying Howey analysis remains fact-intensive. The discussion below describes how a properly structured game token can fit within the release’s framework; whether any particular token actually does is a fact-specific judgment.

The token itself: digital collectible status

A game token used to acquire in-game items, characters, skins, premium features, and rewards points can fall within the category of digital collectibles, which the release states are not securities, provided the token satisfies the conditions set out in the release. The release defines a digital collectible as a crypto asset “designed to be collected and/or used” that “may represent or convey rights to…in-game items.”[2] The SEC explicitly states that “[s]ocial media platforms, video games, and other consumer applications sometimes incorporate digital collectibles to enhance the user experience and facilitate network effects…[t]hese digital collectibles include badges, video game ‘skins,’ and rewards points.”[3]VCOIN, a gaming token used in the IMVU virtual world, is named in the release as an example.[4]

Fiat convertibility on secondary markets does not itself disqualify a token from digital collectible treatment under the release. The release’s analytical framework looks to the structure and marketing of the token, not to whether secondary markets exist or operate in fiat. That said, fiat convertibility raises the practical importance of the marketing analysis discussed below, because tokens with liquid fiat off-ramps are the ones plaintiffs and enforcement attorneys are most likely to scrutinize.

To remain within the digital collectible category, the token must satisfy several conditions set out in the release:

No passive yield or financial rights. The digital collectible must not have “intrinsic economic properties or rights, such as generating a passive yield or conveying rights to future income, profits, or assets of a business enterprise or other entity, promisor, or obligor.”[5]

Value driven by demand, not by the issuer’s efforts. The SEC reasons that a digital collectible’s value, like a physical collectible’s, is based on supply and demand, “which in many cases depends on the subject matter, popularity, or scarcity of the digital collectible.”[6] The release explicitly draws an analogy to physical artwork: buying a digital collectible in the hope that demand will increase the price “is like buying a piece of art with the hope that market forces will create demand for the art and increase its price.”[7]

No representations of profit from the creator’s continuing efforts. The release states: “While the value of a digital collectible may be impacted directly or indirectly by the activities or reputation of the creator…the creator of a digital collectible typically does not make representations or promises to undertake essential managerial efforts from which a purchaser would reasonably expect to derive profits.”[8]

No fractionalization that creates a pooled investment. The release notes that fractionalized digital collectibles, like fractionalized physical artwork, can constitute investment contracts because they involve essential managerial efforts from which a purchaser would reasonably expect to derive profits.[9]

Permitted features include limited intellectual property licenses (display, commercial use), automated creator royalties on resale, and inclusion of the token in a broader digital collection.[10] The release expressly states that automated creator royalties “do[] not change a digital collectible into a security.”[11]

Marketing: the investment contract risk

A token that satisfies the conditions above can still be sold “subject to an investment contract” depending on how the issuer markets it.[12] This is the area of the SEC release that requires the most attention for game publishers because Japanese marketing practice (which often emphasizes roadmaps, future content drops, and platform development) can inadvertently create securities exposure that the underlying token does not have.

The release sets out the analytic framework in Section IV. A non-security crypto asset becomes subject to an investment contract when the issuer offers it “by inducing an investment of money in a common enterprise with representations or promises to undertake essential managerial efforts from which a purchaser would reasonably expect to derive profits.”[13]The release provides explicit guidance on what kinds of representations create that risk.

What creates an investment contract. The release states that representations or promises are “more likely to create reasonable expectations of profit when they are explicit and unambiguous as to the essential managerial efforts to be undertaken by the issuer, contain sufficient details demonstrating the issuer’s ability to implement the proposed project, and explain how the issuer’s efforts will produce the profits that purchasers reasonably expect.”[14] The release gives an example: representations or promises by an issuer “to develop and achieve functionality for a non-security crypto asset and/or develop an associated crypto system together with a business plan containing detailed milestones, a timeline, information about personnel, sources of funding and other resources needed to meet those milestones, and an explanation of how holders of the non-security crypto asset will profit from those efforts, likely would reasonably create an expectation of profit.”[15]

What does not. The release notes that “representations or promises that are vague or contain no semblance of an actionable business plan, such as those lacking milestones, funding, or other plans for needed resources, likely would not create reasonable expectations of profit.”[16]

Channels of communication that matter. The Commission identifies the channels through which the issuer’s representations will be deemed to have reached the purchaser: “written or oral agreements, public communications through which the issuer has established a regular pattern of communicating (such as the issuer’s website or official social media accounts), direct private communications between the issuer and purchasers, regulatory filings publicly available to purchasers, or documents clearly attributable to the issuer (such as a whitepaper).”[17]

Secondary-market trading. Howey analysis applies to the offer and sale of the token. Secondary-market trading and speculative behavior by holders do not, by themselves, turn a non-security token into a security. They can, however, be evidence of how the issuer marketed the offering and of whether the token continues to be distributed as part of an ongoing investment scheme. A publisher whose marketing emphasizes price appreciation and trading liquidity is more vulnerable on this point than a publisher whose marketing emphasizes in-game utility.

Practical implications for marketing materials. Whitepapers, roadmaps, promotional materials, and official social media communications should describe the token as a product feature and as an item to be used and consumed within the game. Statements that holders will profit from the publisher’s ongoing development of the network, growth of the player base, or future updates to the game, particularly when combined with specific milestones and timelines, are the kinds of statements the release flags as creating reasonable profit expectations and therefore as creating an investment contract.

The CLARITY Act

A new draft of the Digital Asset Market Clarity Act was released by the Senate Banking Committee on May 12, 2026.[18]The draft codifies a category of digital commodities called “network tokens” (digital assets intrinsically linked to a distributed ledger system that derive their value from use of that system) and a related subcategory of “ancillary assets,” defined as network tokens whose value is dependent on the entrepreneurial or managerial efforts of an ancillary asset originator or a related person. The draft creates a rebuttable presumption that a network token is an ancillary asset, which the originator or a digital asset intermediary may rebut by submitting a written certification to the SEC, supported by reasonable evidence under SEC-defined standards, sufficient to demonstrate that the network token is not an ancillary asset. Separately, the draft creates a safe harbor for non-fungible tokens, exempting them from the federal securities laws unless they involve an investment contract.[19]

Properly structured pure-consumer game tokens (with no yield, no claim on profits, no fractionalization, and no marketing representations that create reasonable profit expectations) should not be securities under existing law, though the analysis remains fact-specific and Howey-dependent. The proposed CLARITY framework points in the same direction. NFT-format items would qualify for the Section 602 safe harbor absent an investment contract, and fungible tokens with no economic claim would either fall outside the network token / ancillary asset framework entirely or would be candidates for the rebuttable-presumption certification process. The SEC release reaches the same conclusion under existing law, leaving the proposed CLARITY framework directionally aligned with current SEC guidance, provided in each case that the manner of offer and sale does not give rise to an investment contract.

Design-stage takeaways

• Structure the token as a consumable in-game item or feature, not as an investment instrument, if you want to avoid selling a security. 

• Avoid passive yield, profit-share rights, dividend-like distributions, and fractionalization. 

• Audit whitepapers, roadmaps, and pitch materials for forward-looking statements that pair platform development with anticipated token price appreciation. The combination is the most common source of inadvertent investment contract exposure.

• Treat the publisher’s website, official social media, and any documents attributable to the publisher (including whitepapers) as channels where representations will be imputed to the issuer. Centralize communications review.

• Where translation from Japanese to English is involved, review the English version for marketing language that may read more aggressively in U.S. regulatory context than the Japanese original intended.

2. FinCEN Registration as an MSB and State MTLs

This is where most Japanese publishers underestimate the U.S. compliance burden.

The federal rule

Under the Bank Secrecy Act, a company that is engaged as a business in issuing a fungible token that can be cashed out for real currency, and that has the authority to redeem the token, is acting as an administrator of convertible virtual currency. A company that is engaged as a business in exchanging a convertible token for real currency, funds, or other virtual currency is acting as an exchanger. Both are “money services businesses” under FinCEN regulations and must register with FinCEN.[20] Once registered, the company must implement a written anti-money laundering program, perform Know Your Customer verification, file currency transaction reports for cash flows above $10,000 per day, and file suspicious activity reports for transactions of $2,000 or more that meet stated thresholds.

The rule reaches foreign entities, and Japanese FSA compliance does not substitute

Two points are critical for Japanese publishers.

First, FinCEN’s 2019 CVC Guidance confirms the rule for foreign-located issuers: “[t]hese requirements apply equally to domestic and foreign-located CVC money transmitters doing business in whole or in substantial part within the United States, even if the foreign-located entity has no physical presence in the United States.”[21] FinCEN’s 2012 Advisory FIN-2012-A001 further confirms that foreign-located MSBs must comply with all BSA recordkeeping, reporting, AML program, and registration requirements; are subject to the same civil and criminal penalties as MSBs with a physical U.S. presence; and must appoint a U.S. agent for service of process.[22]

Second, compliance with the FSA under the PSA or FIEA does not exempt a Japanese publisher from FinCEN registration. The Bank Secrecy Act does not contain a reciprocity exemption for compliance with foreign regulators. The MSB obligation is triggered by the activities themselves (money transmission within or to the United States), not by the absence of a foreign regulatory regime.

The integral exemption is unlikely to apply

Traditional video games with in-game currencies that cannot be cashed out are typically exempt from money transmitter rules under the “integral to a sale of goods” exemption.[23] That exemption is unlikely to extend to tokens that can be cashed out for fiat or used as a substitute for fiat, because the money transmission in that case is not “integral” to the sale of any good or service other than the transmission itself. The blockchain game model in which players can sell their tokens on an external exchange will rarely qualify, though the analysis is fact-specific and a publisher with an unusual architecture may have a colorable argument worth developing with U.S. counsel.

State licensing is a separate, larger problem

In addition to federal registration, all states (except Montana) and the District of Columbia require money transmitters to obtain and maintain a state license. Each state defines money transmission differently, and the relevant exemptions, including for agents of a payee, payment processors, and activity integral to the sale of goods or services, also vary materially, so an activity that is licensable in one state may fall outside the scope of regulation, or qualify for an exemption, in another. The Conference of State Bank Supervisors’ Money Transmission Modernization Act, adopted in whole or in part by thirty-one states as of early 2026, has reduced but not eliminated this divergence.[24]

State licenses are not paper exercises. They typically require minimum net worth and permissible-investment thresholds, surety bonds, background checks and demonstrated industry experience of principals and control persons, NMLS registration, and ongoing examination by state regulators.[25] In addition, several states, including New York and, as of March 2026, California, have enacted dedicated virtual currency licensing regimes (the NY BitLicense and California Digital Financial Assets Law, respectively), which impose substantive licensing, custody, cybersecurity, and disclosure requirements specifically tailored to virtual currency business activity.[26]

Practical compliance approaches

There are two basic paths: build the compliance function in-house or rely on a third-party vendor that already holds the necessary licenses and operates the regulated functions on the publisher’s behalf.

Vendor modelsgenerally fall into three categories. (1) Licensed wallet and custody providers that hold the player-facing wallet, complete KYC, and handle fiat on- and off-ramps under their own licenses, leaving the publisher’s in-game token economy operating above the regulated layer. (2) MSB-as-a-service providers that act as the regulated counterparty for token sales, redemptions, and fiat conversions, with the publisher operating as a technology provider rather than as the money transmitter. (3) Payment and on-ramp partners that handle the fiat-to-token and token-to-fiat conversion steps under their own licenses, while the publisher retains the in-game economy. These models are not mutually exclusive and most live deployments combine elements.

The build-in-house pathrequires federal MSB registration (relatively fast, but the AML program development that supports it is not), plus the state-by-state licensing project. State money transmitter licensing typically takes twelve to eighteen months per state from application filing to license issuance, with parallel filings possible through NMLS. Capital, surety bond, and background check requirements scale by transaction volume and state. A publisher seeking nationwide U.S. distribution should plan for an eighteen-to-twenty-four-month state licensing roadmap and ongoing examination workload thereafter.

The trade-offsare substantial. Vendor solutions are faster to launch and shift the compliance burden, but they constrain product design (the vendor’s licensing footprint determines which states the publisher can serve), introduce dependency on third-party uptime and pricing, and may limit token architecture options. In-house compliance preserves design flexibility and unit economics at scale but front-loads twelve-to-twenty-four months of licensing work and significant ongoing operating cost.

Whichever path the publisher chooses, the decision needs to be made at the game design stage. The choice affects token architecture (custodial vs. non-custodial, fiat on/off-ramp design), player onboarding flow (where KYC happens and who collects it), unit economics (vendor fees vs. internal compliance overhead), and the launch timeline.

Design-stage takeaways

• Choose the compliance path before finalizing token architecture. The decision affects every downstream design choice.

• If using a vendor, the vendor’s licensing footprint defines the publisher’s addressable U.S. market. 

• If building in-house, plan a twelve-to-twenty-four-month state licensing project and budget for ongoing examination and reporting workload.

• Appoint a U.S. agent for service of process at the time of FinCEN registration.

• Foreign-issuer status does not avoid the U.S. compliance burden, and FSA compliance under the PSA or FIEA is not a substitute. Build U.S. compliance into the launch plan from day one.

• If the in-game token economy can be cleanly separated from the fiat on/off-ramp (e.g., by routing fiat conversion through a licensed partner), the publisher may be able to operate the in-game economy above the regulated layer without itself becoming an MSB. Confirm this design with U.S. counsel before relying on it.

3. Gambling Law

If a player can pay to participate in a game feature, the outcome of that feature is materially determined by chance, and the player wins a token with real-world value, state gambling laws are in play. The doctrinal label is “consideration, chance, and prize.” These are the three elements of gambling under most state statutes.[27] Of these, the consideration element is satisfied wherever the player pays money to access the feature (directly or where the feature is reachable only through a paid entry point in the game). The prize element is satisfied where the token has real-world value, though courts have split on whether secondary market value alone suffices.[28] Which element does the most work in any given case depends on the feature: for pure random-draw features where chance is obvious, courts have focused on whether the token’s value is sufficient to satisfy the prize element. For skill-based or mixed features, the chance element is the pivot.

States diverge on what counts as a sufficient chance element. The majority follow some version of the dominant factor test, asking whether skill or chance is the larger factor in determining the outcome. A meaningful minority of jurisdictions (New York being the most frequently cited) have statutes written in material element terms, under which a game can be gambling whenever chance is a material factor in the outcome, even if skill predominates.[29] Because the tests differ across jurisdictions, the same game feature can be a skill contest in one state and gambling in another.

Risk hierarchy for common token-earning features, lowest to highest:

Lowest risk: Pure skill-based play with token rewards proportional to skill. Where the amount or quality of tokens earned tracks competitive performance, completion times, or leaderboard rank, with no random multiplier or random drop layered on top, dominant-factor states treat the activity as a skill contest. Material-element states are more conservative, but a fully skill-determined reward formula is generally defensible.

Moderate risk: Traditional in-game currency converted to tokens, where the earning was driven by gameplay. Where players earn in-game currency through play and the conversion to tokens does not itself introduce a chance event (no “wheel,” no random multiplier, no random drop), the conversion does not generally create new gambling risk. Risk increases if the conversion mechanism itself involves chance, or if the underlying in-game currency was acquired through chance-based features.

Elevated risk: Mixed features that combine skill with random reward variability. A skill-gated mission that pays out a random quantity of tokens within a range, or a skill contest whose top prize is randomly selected from a tier, sits in the hardest middle ground. Dominant-factor states often (but not always) treat these as skill contests. Material-element states are more likely to find a material chance element.

Highest risk: Loot boxes and similar random-draw features that pay out tokens with real-world value. A paid random draw whose output is a token tradeable for value presents the strongest case for gambling treatment under both the dominant-factor and material-element tests. Mitigating factors do exist (for example, free alternatives to the paid draw, no publisher facilitation of the secondary market, or non-fungible outputs without an established trading market) but these reduce risk rather than eliminate it. This is the feature most likely to draw regulatory and plaintiff attention.

Practical takeaways

• Random elements alone do not make a game gambling. The question is whether chance materially determines what the player wins, whether the player pays to participate, and whether the player wins something of real-world value.

• Token tradeability is the most controllable variable. If tokens are non-transferable or are tradeable only within a tightly controlled in-game marketplace with no cash-out, the prize element of the analysis weakens significantly.

• Free alternatives to paid chance features matter. A meaningful, non-degraded free path to the same rewards can defeat the consideration element in many jurisdictions.

• Where a feature combines skill and chance, structure the chance element so it does not determine the existence of a reward, only its presentation or cosmetic variation. Chance that controls whether a player wins is much riskier than chance that controls which skin a winner receives.

• A nationwide U.S. distribution plan should be designed to the most conservative state’s test, not the dominant-factor median.

Summary

The securities question, which dominated this area for years, is now substantially clearer following the SEC’s March 17, 2026 release. A properly structured game token used to acquire in-game items, characters, and features can fall within the digital collectible framework and outside the federal securities laws, provided the token does not generate passive yield, does not convey rights to the issuer’s profits, is not fractionalized, and is not marketed with representations that create an investment contract. The release is interpretive guidance, not a rule, and the underlying analysis remains fact-specific.

The operational questions are harder. Federal money transmitter registration may apply, including to a Japanese issuer with no U.S. presence, and FSA compliance under the PSA or FIEA does not substitute. State licensing across dozens of jurisdictions is the largest single compliance project. And gambling law requires careful state-by-state review of token-earning features, focused not on whether chance appears in the game but on whether chance materially determines the player’s reward.

All questions must be addressed at the game design stage. Token architecture, marketing materials, player-facing terms, and the choice between in-house compliance and third-party vendor solutions all turn on these answers. A Japanese publisher that resolves them before launch will have a durable, compliant path to one of the largest gaming markets in the world.

[1]SEC, Statement on the Application of the Federal Securities Laws to Crypto Assets, Release No. 33-11412 (Mar. 17, 2026), https://www.sec.gov/files/rules/interp/2026/33-11412.pdf [hereinafter SEC March 17, 2026 Release].

[2]SEC March 17, 2026 Release, supra note 1.

[3]Id.

[4]Id.

[5]Id.

[6]Id.

[7]Id.

[8]Id.

[9]Id.

[10]Id.

[11]Id.

[12]Id.

[13]Id. § IV.

[14]Id.

[15]Id.

[16]Id.

[17]Id.

[18]Senate Banking Committee, Digital Asset Market Clarity Act, Section-by-Section Summary (May 12, 2026), https://www.banking.senate.gov/imo/media/doc/section-by-section.pdf; Senate Banking Committee, Digital Asset Market Clarity Act, draft text (EHF26374) (May 12, 2026), https://www.banking.senate.gov/imo/media/doc/ehf26374.pdf (309-page draft released May 12, 2026, with committee markup scheduled for May 14, 2026).

[19]Digital Asset Market Clarity Act § 602 (Senate Banking Committee draft, May 12, 2026) (safe harbor for nonfungible tokens).

[20]31 C.F.R. § 1010.100(ff)(5); FinCEN, Application of FinCEN's Regulations to Persons Administering, Exchanging, or Using Virtual Currencies, FIN-2013-G001 (Mar. 18, 2013).

[21]FinCEN, Application of FinCEN's Regulations to Certain Business Models Involving Convertible Virtual Currencies, FIN-2019-G001, at 12 (May 9, 2019), https://www.fincen.gov/sites/default/files/2019-05/FinCEN%20CVC%20Guidance%20FINAL.pdf.

[22]FinCEN Advisory FIN-2012-A001, Foreign-Located Money Services Businesses (Feb. 15, 2012), https://www.fincen.gov/resources/advisories/fincen-advisory-fin-2012-a001.

[23]31 C.F.R. § 1010.100(ff)(5)(ii)(F).

[24]Conference of State Bank Supervisors, Money Transmission Modernization Act (Aug. 2021), https://www.csbs.org/csbs-money-transmission-modernization-act-mtma; CSBS, State Pending & Enacted MTMA Legislation (updated 2026), https://www.csbs.org/state-pending-enacted-mtma-legislation.

[25]See CSBS, Money Transmission Modernization Act §§ 201–203, 401–403 (Aug. 2021) (licensing prerequisites, net worth, permissible investments, surety bond, and examination requirements).

[26]23 N.Y.C.R.R. §§ 200.1–200.22 (BitLicense); Cal. Fin. Code §§ 3101 et seq. (Digital Financial Assets Law).

[27]See Kater v. Churchill Downs Inc., 886 F.3d 784, 788 (9th Cir. 2018) (citing State ex rel. Evans v. Bhd. of Friends, 247 P.2d 787, 797 (Wash. 1952) (quoting State v. Coats, 74 P.2d 1102, 1106 (Or. 1938))).

[28]Compare Kater v. Churchill Downs Inc., 886 F.3d 784 (9th Cir. 2018), with Mason v. Machine Zone, Inc., 851 F.3d 315 (4th Cir. 2017).

[29]N.Y. Penal Law § 225.00(1)