Japan is on the verge of a major regulatory shift in how it approaches crypto assets, as the country prepares to formally recognize them as financial products under its Financial Instruments and Exchange Act. This move by the Financial Services Agency (FSA) signifies a significant step towards bringing cryptocurrencies under the same legal category as traditional securities.
The proposed bill, expected to be submitted to parliament as early as 2026, aims to subject crypto assets to insider trading laws that prohibit the use of non-public information for personal gain. This change would align digital assets with the regulatory standards of mainstream financial markets, where such trading practices are illegal.
Until now, cryptocurrencies have operated in a separate regulatory space with limited oversight on trading practices. However, with this upcoming amendment to the legislation, Japan is set to join the ranks of countries like the US in integrating crypto assets into traditional financial oversight frameworks.
In the US, the Commodity Futures Trading Commission (CFTC) recently announced that digital asset derivatives will be treated with the same regulatory rigor as other financial instruments. Additionally, the Federal Deposit Insurance Corporation (FDIC) issued new guidance allowing banks to engage in crypto-related activities without prior approval, while the Office of the Comptroller of the Currency (OCC) clarified permissions for national banks dealing with crypto.
In Japan, the proposed legal update could pave the way for the introduction of crypto exchange-traded funds (ETFs) and a reduction in the tax rate on crypto profits. While these developments signal progress in the country’s approach to crypto regulation, the Japanese government remains cautious about more radical shifts, such as including Bitcoin in national reserves, citing concerns about volatility and legal constraints.
Overall, Japan’s decision to classify crypto assets as financial products and impose insider trading restrictions marks a significant milestone in the evolution of the country’s crypto regulatory landscape. As global regulators continue to adapt to the growing presence of digital assets, these changes reflect a broader trend towards integrating cryptocurrencies into traditional financial systems.