Japan to Classify Cryptocurrencies as Financial Products by 2026

Highlights:

• Japan plans to classify crypto as financial products and apply insider trading rules to digital assets.
• Crypto exchanges in Japan may need to keep client assets in domestic custody for better protection.
• The changes could impact global crypto firms as Japan aims to apply new rules to foreign companies.

Japan’s Financial Services Agency (FSA) is considering changing the laws in Japan so that cryptocurrencies will be classified as financial products. The agency will amend the Financial Instruments and Exchange Act. It may submit the proposed bill to parliament as early as next year. The FSA has been reviewing these changes through a discussion with experts, according to a report from Nikkei. This revised classification would consider cryptocurrencies as stocks and subject them to insider trading rules. This change would make trades based on non-public information illegal.

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🚨JUST IN: JAPAN PLANS TO CLASSIFY CRYPTOCURRENCIES AS FINANCIAL PRODUCTS AS EARLY AS 2026, SAYS NIKKEI

— BSCN (@BSCNews) March 31, 2025

The FSA has been working on several updates to its financial laws to keep up with the growing use of digital assets. On March 7, 2025, the agency submitted a bill to the National Diet to revise the Payment Services Act, which covers stablecoins and cryptocurrencies.

This proposed change would allow trust stablecoins to hold up to 50% of their reserves in term deposits or government bonds. Currently, they are limited to demand deposits. However, the one-to-one peg would stay as it is. Another major change requires crypto exchanges to keep client assets in domestic custody for improved bankruptcy protection.

Impact on Crypto Markets and Financial Institutions

If the proposed changes occur, crypto services companies will face new requirements. FSA would force firms dealing in crypto in Japan to register. According to Nikkei, the agency plans to apply these rules to foreign companies. However, the implementation details remain unclear. Such changes may affect exchanges, trading platforms, and digital asset service providers.

In addition, the proposed amendments create a new type of intermediary. Brokers that allow their clients to access crypto exchanges but do not operate a platform themselves will not need to register as an exchange. These entities would not be required to hold or conduct anti‐money laundering checks on client funds. However, they would have to abide by advertising rules and advise clients on the risks involved. The framework may also cover stablecoin transactions.

The growth of stablecoins is also being supported by the country’s changing financial laws. Currently, stablecoins can be issued by banks, money transfer businesses, and trust companies. Trust companies are expected to play a leading role in this space because they can issue stablecoins for third parties. Mitsubishi UFJ Trust has already explored projects in this area. Recently, SBI VC Trade became the first exchange in Japan to receive a license allowing it to handle foreign stablecoins such as USDC.

Global Push for Crypto Adoption

The decision made by Japan to alter its stance on cryptocurrencies is in line with such actions in other countries recently. The Commodity Futures Trading Commission (CFTC) in the United States has stated that digital asset derivatives will now be regarded equally to other financial products. At about the same time, the Federal Deposit Insurance Corporation (FDIC) issued guidance that allows banks to engage in crypto activities without prior approval.

The rest of the governments will watch how Japan will impose these changes. With digital assets becoming more common, financial authorities in different countries are taking action to prevent risks and leverage opportunities.

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