Japan revises the Financial Instruments and Exchange Act; crypto assets are formally included as financial products

The Japanese government approved amendments to the Financial Instruments and Exchange Act at the Cabinet meeting on April 10, marking the first time that cryptocurrencies are clearly classified as “financial instruments,” and introducing insider trading prohibitions and annual disclosure obligations by analogy with traditional financial assets. This move signals that Japan’s cryptocurrency regulation has entered an entirely new phase, with the earliest expected full implementation in the 2027 fiscal year.

From payment instruments to financial products: Japan’s crypto regulatory framework shifts

According to a Nikkei report, Japan’s Financial Services Agency (FSA) has historically regulated crypto assets under the “Funds Settlement Act,” treating them as a form of payment. However, as institutional investors have moved in aggressively in recent years, the investment characteristics of cryptocurrencies have become increasingly prominent, and the existing framework can no longer adequately address market realities.

The amendments transfer the basis for regulation formally to the Financial Instruments and Exchange Act, and rename the business category from “crypto asset exchange businesses” to “crypto asset trading businesses,” indicating that Japan has officially elevated crypto assets from “payment instruments” to “financial instruments” at the same level as stocks and bonds.

(Japan Financial Services Agency new rules submitted in 2026, mandatory disclosure for 105 coin types, and prohibition of insider trading)

Three core regulatory requirements of the new law: prohibit insider trading, require disclosure, and increase penalties

The amendments establish three core regulatory mechanisms:

First, they explicitly prohibit trading cryptocurrencies using undisclosed information, extending insider trading controls to the cryptocurrency market.

Second, they require cryptocurrency issuers to publicly disclose relevant information at least once every year to improve market transparency.

Third, they significantly increase penalties for violations: for businesses operating without registration, the maximum imprisonment term is raised from 3 years to 10 years, and the maximum fine increases from 3M yen to 10M yen, strengthening investor protection.

Japanese Minister of Finance Koyuki Katayama said at a subsequent press conference that the goal of the amendments is “to respond to changes in financial capital markets and expand the supply of growth capital, while ensuring market fairness, transparency, and investor protection.”

Japan’s crypto market fully loosens up: tax reform and ETF openings

As part of Japan’s comprehensive reform of the crypto asset market, the Japanese government in December 2025 already submitted a plan to reduce cryptocurrency tax rates to a unified single rate of 20%, substantially easing the tax burden that is currently over 55% at the highest end under the progressive tax system.

In addition, Japan also expects to open cryptocurrency ETFs in 2028. Local financial giants such as Nomura Holdings (Nomura Holdings) and SBI Holdings are expected to be among the first to launch related exchange-traded products, further opening the channel for institutional capital to enter the crypto market.

(Financial Services Agency evaluates releasing crypto ETFs in 2028; Nomura and SBI may become leading players)

On par with traditional finance: Japan’s crypto regulation leads Asia

Today, Japan is actively integrating crypto assets into the traditional financial system with a “regulate rather than ban” approach. Amid differing regulatory stances toward crypto across Asian countries, Japan’s move will provide local investors with more comprehensive legal protection and will be more conducive to establishing a complete regulatory framework for crypto financial products.

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