Japan Considers Changing Cryptocurrency Classification to 'Financial Product' to Prevent Insider Trading: Report
Currently, cryptocurrencies are defined as a “means of payment” under the Payment Services Act, which implies that they are primarily used as a payment instrument rather than as an investment instrument.
Posted by Shaurya Malwa | Edited by: Parikshit Mishra Updated: March 31, 2025 15:26 UTC Published: March 31, 2025 06:04 UTC
Key points:
- Japan's Financial Services Agency (FSA) plans to propose reclassifying cryptocurrencies as financial products to curb insider trading in the digital asset market.
- The proposal is part of a broader effort to tighten oversight of Japan's cryptocurrency ecosystem, which has seen an increase in both adoption and fraud.
- The FSA intends to submit amendments to the Financial Instruments and Exchange Act (FIEA) to the Japanese Diet as early as 2026 after careful analysis.
Japan's Financial Services Agency (FSA) plans to reclassify cryptocurrencies as financial products under new rules aimed at combating insider trading in the digital asset market, according to a Nikkei report published on Sunday.
The move is part of a broader effort to tighten controls over Japan's cryptocurrency ecosystem, which has seen growing adoption amid rising fraud.
The Financial Services Authority (FSA) plans to submit amendments to the Financial Instruments and Exchange Act (FIEA) to Japan's Diet as early as 2026 after a detailed analysis by experts behind closed doors.
Currently, cryptocurrencies are designated as “means of payment” under the Payment Services Act, which implies their use primarily as a payment instrument rather than as an investment instrument.
However, the existing classification has left gaps in regulation, particularly with regard to activities such as insider trading.
Therefore, specific details of the insider trading rules, such as the definition of insider information in the context of cryptocurrencies or sanctions for violations, have not yet been disclosed, leaving room for further clarification as the proposal is being formulated.
