The updated framework acknowledges the growing role of institutional investors in the market and aligns oversight with that shift.
Crypto News
Japan's parliament amended the Financial Instruments and Exchange Act on Friday, formally reclassifying crypto assets as financial instruments. The move shifts crypto out of the payments regulatory framework it previously occupied under the Payment and Settlement Act, bringing it under the same oversight structure as equities and other traditional securities.
Finance Minister Satsuki Katayama said at a press conference following the Cabinet meeting that the government aims to "expand the supply of growth capital in response to changes in financial and capital markets, and ensure market fairness, transparency, and investor protection." The amendment introduces a ban on insider trading and other transactions executed on the basis of undisclosed information, a restriction previously absent from crypto-specific regulation. Crypto issuers will also now be required to publish annual disclosures.
The Japan Financial Services Agency had previously treated crypto as a payment instrument, a classification that reflected the asset class's earlier adoption patterns. The updated framework acknowledges the growing role of institutional investors in the market and aligns oversight with that shift.
Penalties for operating unregistered crypto exchanges have also been increased under the amended legislation. The changes signal a broader intent to bring crypto market conduct in line with the standards applied to Japan's stock market. Japan's shift comes after months of policy signals pointing in this direction.
In January, Katayama stated publicly that exchanges and market infrastructure would be central to ensuring citizens benefit from digital and blockchain-based assets. The government also backed a proposal in December to cap the tax rate on crypto profits at a flat 20%, down from the higher variable rate previously applied.
Japan is separately moving toward legalizing crypto exchange-traded funds by 2028, according to a January report. Major financial institutions, including Nomura Holdings and SBI Holdings, are expected to be among the first to develop crypto-linked exchange-traded products under that framework.
The combination of reclassification, insider trading restrictions, mandatory disclosure, and planned ETF access represents one of the most comprehensive regulatory overhauls of BTC and ETH market infrastructure among major economies this year. It also positions Japan as a jurisdiction where institutional capital can operate under a clearly defined legal framework.
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