Japan to Classify Crypto as Financial Products, Impose Insider Trading Restrictions: Report

Japan is preparing to formally recognize crypto assets as financial products under its Financial Instruments and Exchange Act, signaling a major shift in how the country approaches digital asset regulation.

The Financial Services Agency (FSA) plans to submit a bill to parliament as early as 2026 to amend the legislation, Nikkei reported on March 31.

If passed, the change would bring cryptocurrencies under the same legal category as traditional securities—subjecting them to insider trading laws that prohibit the use of non-public information for personal gain.

Until now, digital assets have largely operated in a parallel regulatory space, with limited oversight on trading practices that would be illegal in mainstream financial markets.

JUST IN: 🇯🇵 Japan to legally classify Bitcoin and crypto assets as financial products – Nikkei pic.twitter.com/IQFhU9FRRI

— Bitcoin Archive (@BTC_Archive) March 30, 2025

Japan Joins US in Marking New Phase in Institutional Crypto Regulation

The FSA has been quietly working on these reforms in closed-door discussions with legal and financial experts, aiming to tighten controls while providing clearer rules for the fast-evolving crypto sector. This move reflects a broader global trend where regulators are stepping up efforts to integrate crypto assets into traditional financial oversight frameworks.

Meanwhile, in the US, the Commodity Futures Trading Commission (CFTC) recently announced it will now treat digital asset derivatives with the same regulatory rigor as other financial instruments.

Additionally, the Federal Deposit Insurance Corporation (FDIC) issued new guidance allowing banks to engage in crypto-related activities—provided they manage the risks appropriately—without needing prior approval. The Office of the Comptroller of the Currency (OCC) also clarified permissions for national banks dealing with crypto, signaling a broader regulatory green light.

Japan Eyes Crypto ETFs and Lower Taxes, But Stays Wary of Bitcoin Reserves

Back in Japan, the proposed legal update may also open doors to future products like crypto exchange-traded funds (ETFs). Earlier this month, lawmakers suggested a new framework under the same Act that could enable ETFs and slash the tax on crypto profits from 55% to 20%.

While progressive on some fronts, the Japanese government remains cautious about more radical shifts—such as including Bitcoin in national reserves—citing volatility and legal constraints.