Japan’s Financial Services Agency Considers Regulation: Officially Classifying Cryptographic Assets as Financial Products

Current Status of Cryptocurrency Regulation in Japan

At present, Japan classifies cryptocurrencies as settlement tools under the Payment Services Act. However, the Financial Services Agency (FSA) plans to amend the Financial Instruments and Exchange Act to include cryptocurrencies under financial regulation, with the earliest submission to the Diet expected in 2026. Prior to this, experts will conduct closed-door studies and analyses of the current legal framework. Reports indicate that if the amendment is successful, not only cryptocurrency exchanges but also companies promoting cryptocurrency investments will be required to register with financial regulatory authorities.

Details of the New Legislation

According to the Nikkei, the new legislation may classify cryptocurrencies separately from traditional securities such as stocks and bonds, but insider trading rules are expected to be based on existing financial product standards. Specific details have yet to be announced, but this move indicates that the FSA is attempting to integrate the cryptocurrency market into a more stringent regulatory framework.

Challenges in Regulation

The FSA hopes the new rules will apply to all companies serving Japanese citizens, regardless of their headquarters’ location. However, effectively regulating overseas entities remains an unresolved challenge. Last month, the FSA made its first request for Apple and Google to block five unregistered overseas cryptocurrency exchanges from their Japanese app stores, indicating that it has begun to take action.

Cryptocurrency Market Activity in Japan

Reports indicate that as of January 2025, Japan has approximately 7.34 million active cryptocurrency trading accounts, reflecting the scale and activity of the country’s cryptocurrency market.