Japan’s Financial Services Agency (FSA) is set to revise laws to classify cryptocurrencies as financial products by 2026. This change aims to place cryptocurrencies under insider trading laws currently applicable to traditional financial products like stocks. Although cryptocurrencies will be regulated differently from securities, entities dealing with crypto will need to register with the FSA. The regulator intends to enforce these rules even against overseas companies, although the enforcement specifics remain unclear. Moreover, it is yet to be determined which cryptocurrencies will fall under this regulation, especially distinguishing between stablecoins and high-risk tokens. This move follows other pro-crypto regulatory actions in Japan, including tax reforms and discussions around crypto ETFs. The FSA’s initiatives, coupled with support from the ruling Liberal Democracy Party, signify a shift towards formalizing and regulating the cryptocurrency sector in Japan.

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