Japan Greenlights Bill to Regulate Crypto as Financial Instruments

The Japanese government has approved an amendment to the Financial Instruments and Exchange Act (FIEA) that classifies crypto assets as financial products.

The bill introduces prohibitions on insider trading, requires annual disclosures by issuers, and imposes significantly harsher penalties for unlicensed operators. If passed during the current parliamentary session, the law would take effect as early as fiscal year 2027.

Japan Rewrites the Rules on Crypto

The Financial Services Agency (FSA) previously regulated crypto under the Payment Services Act, treating digital assets primarily as payment instruments. However, this will shift to the FIEA amid growing use of crypto for investment purposes, Nikkei reported.

Finance Minister Satsuki Katayama spoke at a press conference following the cabinet meeting.

“In response to changes in financial and capital markets, we will expand the supply of growth capital while ensuring market fairness, transparency, and investor protection,” Katayama said. 

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Japan now has over 13 million crypto accounts. The FSA receives more than 350 fraud-related complaints per month, according to a Baker McKenzie report published earlier this year.

The FSA signaled plans for this shift in late 2025. The latest approval moves that recommendation into formal legislation. The change will also rename registered firms from “crypto asset exchange operators” to “crypto asset trading operators.”

Under the FIEA, trading crypto assets based on undisclosed information will be explicitly prohibited. Penalties for unlicensed operators who sell crypto assets increase sharply. Maximum prison terms rise from 3 to 10 years. Fines jump from ¥3 million to ¥10 million.

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