Japan's government approved a landmark amendment to the Financial Instruments and Exchange Act on Friday, formally reclassifying crypto assets as financial instruments. The move shifts oversight from the Payment and Settlement Act — where crypto was treated as a payment tool — to a tougher securities-like framework.
Reported by Nikkei, the new legislation explicitly bans insider trading: buying or selling digital assets based on non-public information is now illegal. Crypto issuers must also maintain higher transparency by disclosing financial data at least once a year.
Stiffer Penalties, Clearer Oversight
Unlicensed exchanges face heavier fines and longer prison sentences under the revised law. The Financial Services Agency (FSA) will enforce the rules under the new legal umbrella, replacing its previous mandate under the Payment and Settlement Act.
“We will expand the supply of growth capital in response to changes in financial and capital markets, and ensure market fairness, transparency, and investor protection,” Finance Minister Satsuki Katayama said in a statement.
Tax Reform and ETF Roadmap
Separately, the government is overhauling the tax regime. In December, officials backed a plan to cap crypto profit tax at a flat 20%, down from the current progressive rate. Katayama earlier this year stressed that robust exchange infrastructure is crucial for citizens to benefit from blockchain.
Longer-term, Japan aims to legalize crypto exchange-traded funds (ETFs) by 2028, according to a January report. Major players like Nomura Holdings and SBI Holdings are expected to lead the charge. The cumulative effect: crypto enters a regulatory environment closer to stocks and bonds, with higher compliance costs and stronger investor protections.