Japan’s financial authority is reportedly poised to revise its classification of cryptocurrencies under financial legislation, introducing new compliance obligations.
Japan appears to be on the verge of designating cryptocurrencies as financial products in an effort to tackle insider trading, according to reports. The Financial Services Agency (FSA) is said to be drafting a bill to amend the Financial Instruments and Exchange Act, which may be presented to parliament as soon as 2026.
Currently, cryptocurrencies such as Bitcoin (BTC) are classified as a means of settlement under the Payment Services Act, based on their initial expected use primarily for transactions. If reclassified, they would likely fall into a different category from conventional securities like stocks.
The nation has experienced a significant increase in crypto trading activity, with active cryptocurrency accounts reaching approximately 7.1 million as of 2024—over three times the figure from five years ago, according to statistics.
If cryptocurrencies are designated as financial products, firms attempting to offer investments may need to register with regulatory bodies—not just exchanges—because authorities are reportedly receiving more complaints from investors who believe they were misled into purchasing crypto assets. The FSA might impose stricter regulations irrespective of a company’s location, although the specific enforcement strategy remains unclear.
Earlier in March, Japan’s Cabinet approved a proposal to modify the Payment Services Act, intending to relax regulations for stablecoins and crypto brokerages, thus facilitating the establishment of crypto businesses in the country.