Japan to classify cryptocurrencies as financial products: Report

Japans Financial Services Agency will look to change financial laws to bring cryptocurrencies under insider trading rules as early as 2026, Nikkei reports.

Japan‘s finance regulator is planning to change the country’s laws to classify cryptocurrencies as financial products as early as 2026, according to the local outlet Nikkei.

The Financial Services Agency (FSA) plans to submit a bill to parliament to revise the Financial Instruments and Exchange Act as early as next year after having considered the changes through internal study groups, Nikkei reported on March 30 without citing a source.

The outlet reported that the details are still being finalized, but the change would see cryptocurrencies likely put under insider trading laws that currently apply to other financial products, such as stocks, which outlaw trades based on insider information.

However, cryptocurrencies are likely to be put in a separate category from securities such as stocks and bonds.

If the changes go through and crypto is regulated under the countrys finance laws, companies offering crypto would have to register with the FSA.

Nikkei reported that the regulator plans to enforce the new rules regardless of whether a company operates in Japan, but it was unclear how the laws would be enforced against overseas entities.

Also unclear was what cryptocurrencies would be regulated and how distinctions would be made between widely traded assets such as Bitcoin (BTC) and Ether (ETH) compared to speculative and high-risk tokens such as memecoins.

The FSAs headquarters is in central Tokyo, just across the street from the Ministry of Finance. Source: Wikimedia

The reported upcoming change comes amid a wave of pro-crypto moves made by Japans regulators and government.

Earlier this month, the country issued its first license allowing a company to deal with stablecoins to SBI VC Trade, a subsidiary of the local financial conglomerate SBI, which said it was preparing to support Circles USDC (USDC).

The countrys ruling Liberal Democracy Party also moved ahead with reforms to slash the capital gains tax on crypto from 55% to 20% and categorize digital assets as a distinct asset class.

In February, local reports said the FSA was looking to lift a ban on crypto-based exchange-traded funds (ETFs) to align with the policy position of Hong Kong, which approved crypto ETFs for trading in April 2024.