Japan Plans to Classify Crypto as Financial Instrument Following New Amendment

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The Japanese government has approved an amendment to reclassify virtual currencies as financial instruments.

The new amendment to the Financial Instruments and Exchange Act was approved by the Cabinet on April 10, which also introduces stricter oversight of Japan’s crypto markets, including a ban on insider trading and any other trading based on non-public information.

Under the updated framework, issuers of virtual currencies will be required to publish annual disclosures. This is intended to improve transparency and encourage a more stable investment environment that reflects the increasing use of virtual currencies as investment assets in Japan.  

Japan’s Financial Services Agency previously treated virtual currencies as a means of payment and regulated them under the Payment Services Act. The new classification under the Financial Instruments and Exchange Act brings them closer in line with traditional financial instruments.

At a press conference following the Cabinet meeting on April 10, Finance Minister Satsuki Katayama explained,

We will expand the supply of growth capital in response to changes in the financial and capital markets, while ensuring market fairness, transparency, and investor protections.

The amendment also significantly increases penalties for operators who fail to register correctly. Unregistered operators could face prison sentences of up to 10 years, up from three years, as well as increased fines of up to ¥10 million (approx. US$65,000).

If passed during the current parliamentary session, the law could come into force as early as 2027.