James Richardson
Japan’s Financial Services Agency (FSA) is preparing to classify crypto assets as financial products, a move aimed at strengthening regulations on crypto insider trading, according to a report by Nikkei.
The regulatory body is expected to propose amendments to the Financial Instruments and Exchange Act to the Japanese parliament by 2026 after conducting a closed-door review of the current legal framework. Currently, cryptocurrencies in Japan are categorized as a means of settlement under the Payment Services Act.
Stronger Oversight on Crypto Firms and Investment Solicitation
The proposed changes would enable the FSA to impose stricter oversight on crypto exchanges and firms soliciting digital asset investments, requiring them to register with financial regulators. This move is seen as a response to the growing number of fraudulent cryptocurrencies and scams in the industry.
While crypto assets are expected to be placed in a separate category from traditional securities like stocks and bonds, insider trading rules would closely resemble those applied to conventional financial products, Nikkei reported. However, specific details on these regulations are yet to be disclosed.
Challenges in Regulating Foreign Crypto Firms
Japan’s financial regulator intends to apply these rules to all crypto service providers offering services to local residents, regardless of whether they are based in Japan or overseas. However, the enforcement mechanism for foreign firms remains unclear.
In a recent crackdown on unregistered exchanges, the FSA requested Apple and Google to block five unauthorized overseas crypto trading platforms from their app stores in Japan.
As of January 2025, Japan had approximately 7.34 million active crypto trading accounts, according to Nikkei.
