Japan is set to reshape its cryptocurrency market with stricter trading laws, stronger consumer protections and a framework closer to traditional finance.
The country’s parliament on Wednesday approved a revision that classifies crypto assets as financial assets under Japan’s Financial Instruments and Exchange Act (FIEA). According to According to a report by local news agency Niki.
The changes move Japan’s crypto regulation away from the Payment Services Act (PSA), which treats digital assets primarily as payment instruments, and introduce insider trading rules and stronger oversight for crypto businesses.
The overhaul marks one of Japan’s biggest changes to digital asset policy as regulators around the world continue to debate how crypto should fit into the existing financial system.
Crypto exchanges face strict supervision.
Under the revised framework, crypto businesses operating in Japan will face additional compliance obligations designed to improve market integrity and protect consumers.
The updated rules prohibit issuers, exchanges and other market participants from trading while they are aware of undisclosed material information, creating insider trading restrictions that apply in traditional finance (TradFi).
Source: Reuters Legal
The revised laws increase penalties for companies operating without registration, reportedly increasing the maximum prison sentence from three years to 10 years and fines from about 3 million Japanese yen ($19,000) to about 10 million yen.
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Violations of insider trading can result in up to five years in prison, fines of up to 5 million yen, or both, the report said.
Global regulators align crypto with financial norms.
In line with Japan’s move to bring crypto closer to TradFi, the revised law reportedly changes the terms of registered businesses from “cryptocurrency exchange” to “cryptocurrency trading company.” This change reflects the broader financial role that regulators now assign to the sector.
Japan’s crypto-regulation progress reflects a broader global trend of regulators treating the sector as entirely separate, rather than applying the existing financial framework to crypto.
South Africa’s tax authority published draft guidance in early July explaining how existing tax laws apply to crypto assets, while US regulators continue to clarify how existing securities and commodities laws apply to digital assets.
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