Japan to Classify Cryptocurrencies as Financial Products
Japan’s financial regulator is reportedly preparing to revise national legislation to classify cryptocurrencies as financial products by 2026, according to local outlet Nikkei.
The Financial Services Agency (FSA) is expected to submit a bill to parliament next year to amend the Financial Instruments and Exchange Act.
This follows the agency’s internal studies and discussions, Nikkei reported on March 30, though it did not name its sources.
While the specifics are still being finalized, the proposed changes would likely bring cryptocurrencies under insider trading regulations, similar to those that apply to traditional financial products like stocks.
These laws prohibit trading based on non-public, material information.
Despite this shift, cryptocurrencies are expected to be categorized separately from securities such as stocks and bonds.
If passed, the new laws would require crypto-related businesses to register with the FSA.
The agency reportedly intends to apply the rules even to companies operating outside of Japan, though it remains unclear how enforcement would work in such cases.
It’s also not yet clear which cryptocurrencies would fall under the new regulations or how regulators would differentiate between major assets like Bitcoin and Ethereum and more speculative, high-risk tokens like memecoins.
The FSA’s headquarters is located in central Tokyo, across the street from the Ministry of Finance.
This reported legal shift comes amid a broader wave of crypto-friendly developments in Japan.
Earlier this month, the government granted its first license for a company to handle stablecoins to SBI VC Trade, a subsidiary of financial giant SBI.
The company said it is preparing to support Circle’s USDC.
Japan’s ruling Liberal Democratic Party has also moved to reduce the capital gains tax on crypto assets from 55% to 20% and to recognize digital assets as a distinct asset class.
In February, local media reported that the FSA was considering lifting its ban on crypto exchange-traded funds (ETFs), in a move to align with Hong Kong’s policy stance. Hong Kong approved crypto ETFs for trading in April 2024.
Sources:
https://cointelegraph.com/news/japan-legally-classify-crypto-financial-products-report
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