Japan eyes stricter crypto rules targeting insider trading: report

Japan’s financial regulator is reportedly set to redefine crypto under financial law, subjecting it to new compliance requirements.

Japan might be preparing to classify cryptocurrencies as financial products in a move to target insider trading, Nikkei has learned. The country’s financial regulator, the Financial Services Agency, is said to be planning a bill to revise the Financial Instruments and Exchange Act, which could be submitted to parliament as early as 2026.

As of press time, cryptocurrencies like Bitcoin (BTC) are treated as a means of settlement under the Payment Services Act, as they were initially expected to be used mainly for payments. If reclassified, they will likely be placed in a different category from traditional securities like stocks.

Japan has seen a surge in crypto trading activity, with active cryptocurrency accounts reaching about 7.1 million as of 2024 — more than three times the number five years ago, per data from Statista.

If crypto gets classified as a financial product, companies pitching investments might have to register with regulators — not just exchanges — since authorities are reportedly seeing more complaints from investors who feel they were misled into buying crypto. According to the report, the FSA might enforce stricter rules regardless of a company’s location, though it remains unclear how exactly the agency is planning to enforce the new rules.

Earlier in March, Japan’s Cabinet signed off on a proposal to amend the Payment Services Act, aiming to loosen regulations for stablecoins and crypto brokerages, and making it easier for crypto firms to set up a presence in Japan.