Japan Considers Officially Classifying Cryptocurrencies As Financial Products By 2026

Japan’s financial regulator is planning to change the country’s laws to classify cryptocurrencies as financial products as early as 2026 as part of new regulations aimed at curbing insider trading in the digital asset market.

Japan Mulls Granting Cryptocurrencies Legal Status

Japan is reportedly rethinking how it wants to treat crypto assets.

According to local outlet Nikkei, the Financial Services Agency (FSA) intends to submit a bill to parliament amending the Financial Instruments and Exchange Act (FIEA) as early as next year after conducting detailed closed-door consultations with industry experts. 

Currently, Japan classifies cryptocurrencies as a means of settlement under the Payment Services Act. This designation has overseen their use mainly as a payment tool rather than as an investment vehicle.

While the details are still being finalized, Nikkei reports that the upcoming rule change would “resemble” what’s already in place for conventional financial products such as stocks, which outlaw trades based on insider information.

If the change is enacted and crypto is regulated under Japan’s finance laws, all firms soliciting crypto investments must register with the FSA.

While the FSA seeks to apply new rules to companies servicing local users regardless of their locations, it’s unclear how the regulator intends to enforce regulations on overseas entities.

The notable regulatory shift comes as Japan embraces cryptocurrency adoption, creating new frameworks and recognizing how crypto has extended its use cases from payments to investments and beyond. This encourages regulators to reconsider how they oversee the fast-growing industry. Better safety measures could effectively attract more institutions to crypto investments.

As ZyCrypto reported, a Japanese lawmaker named Satoshi called on his government to consider launching a National Bitcoin Reserve as calls to stockpile the apex crypto gain traction worldwide. Japan is also home to Metaplanet, Asia’s largest Bitcoin holder, which currently boasts a 3,350 BTC stash. The company is issuing more debt to buy additional Bitcoin after adopting the alpha crypto as its primary reserve asset in May 2024.