Japan's Financial Services Agency (FSA) is reportedly planning to amend its laws to classify cryptocurrencies as financial products by as early as 2026. According to Nikkei, the FSA intends to submit a bill to parliament next year to revise the Financial Instruments and Exchange Act following discussions among internal study groups. Under these changes, cryptocurrencies would likely fall under insider trading regulations similar to those applicable to stocks, aiming to prevent trades based on non-public information. However, cryptocurrencies are expected to be categorized separately from traditional securities like stocks and bonds. If the bill is approved, companies offering cryptocurrencies would be required to register with the FSA. However, the details of enforcement against international firms and the specific cryptocurrencies that will be regulated remain uncertain. The legislation will also need clear guidelines on distinguishing between widely traded assets such as Bitcoin (BTC) and Ether (ETH) and more speculative tokens like memecoins. This move aligns with Japan's recent pro-crypto regulatory trends, including granting licenses for stablecoin operations. The ruling Liberal Democratic Party is also working to reduce the capital gains tax on cryptocurrencies and recognize digital assets as a unique asset class. Additionally, there are considerations to lift a ban on crypto-based ETFs to align with policies in other regions, such as Hong Kong.

Japan's Financial Services Agency (FSA) is reportedly preparing to amend its laws to classify cryptocurrencies as financial products by as early as 2026, according to a report by Nikkei. The FSA plans to submit a bill to parliament next year aimed at revising the Financial Instruments and Exchange Act, following discussions within internal study groups. If enacted, this change would subject cryptocurrencies to insider trading regulations similar to those governing stocks, which prohibit trades based on non-public information. However, cryptocurrencies are expected to be classified separately from conventional securities like stocks and bonds. If the bill passes, businesses that offer cryptocurrencies will need to register with the FSA. However, how these laws will be enforced on international companies and which specific cryptocurrencies will come under regulation remains uncertain. The framework will also need to clarify how to differentiate between widely traded cryptocurrencies like Bitcoin (BTC) and Ether (ETH) and more speculative assets such as memecoins. This proposed legislation aligns with a series of pro-cryptocurrency regulatory measures taken by Japan. These include licensing stablecoin operations and initiatives by the ruling Liberal Democratic Party to reduce the capital gains tax on cryptocurrencies and categorize them as a distinct asset class. Additionally, there is potential consideration of lifting a ban on crypto-based exchange-traded funds (ETFs) to align with practices in regions like Hong Kong.