Japan Moves to Classify Crypto as Financial Products, Eyes New Trading Rules

Japan’s Financial Services Agency (FSA) is working on a proposal to amend existing financial laws, aiming to bring cryptocurrencies under the same regulatory framework as traditional financial instruments.

Currently treated as property-like assets with payment functionality, digital currencies could soon be subject to financial product regulations, which would have wide-ranging implications for the market.

Rather than making abrupt changes, the FSA is taking a measured approach. A specialized advisory group will be formed to evaluate potential challenges and benefits, and if the initiative progresses smoothly, a formal proposal may be submitted to Parliament by early 2026.

If implemented, this shift could open the door to cryptocurrency-based exchange-traded funds (ETFs) and possibly reduce the tax burden for investors by integrating digital assets into conventional financial market regulations.

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Beyond reclassification, Japan is also tightening its grip on market fairness by crafting new laws to prevent insider trading in the crypto space. The FSA is advocating for regulations that would ban trading based on non-public information, reinforcing investor protection and ensuring a level playing field for all participants.

Meanwhile, Japan’s cryptocurrency sector is seeing notable developments. Circle, the issuer of USDC, recently secured regulatory approval, paving the way for top exchanges to list the stablecoin. In another significant move, Metaplanet has enlisted Eric Trump as a strategic advisor as the company continues increasing its Bitcoin holdings.

Alexander Stefanov