Japan’s Financial Services Agency (FSA) is reportedly exploring the possibility of classifying cryptocurrencies as financial products akin to securities, according to Yahoo Japan, which cites local media sources.
The agency has initiated private consultations with experts to reassess the current regulatory framework.
The FSA is expected to outline its policy direction by June before seeking input from the Financial System Council during its fall meeting. A potential legal amendment could be introduced in 2026, though the timeline remains uncertain.
If cryptocurrencies are classified as securities, retail investors may face increased hurdles. However, the move could also pave the way for spot crypto ETFs in Japan. The FSA is considering whether to regulate cryptocurrencies under existing securities laws within the Financial Instruments and Exchange Act or introduce new rules under the FIEA or the Payment Services Act. Additionally, the agency assesses whether these regulations should apply to all cryptocurrencies or only major assets like Bitcoin and Ethereum.
In October, a domestic study group recommended prioritizing Bitcoin and Ethereum for crypto ETFs, refining regulatory frameworks, and applying distinct tax rules for ETFs and spot transactions. Despite these recommendations, Japan’s regulators remain cautious. In an interview, Oki Shiozawa of Sumitomo Mitsui Trust Asset Management stated that the FSA is not inclined to approve crypto ETFs. While not ruling them out entirely, he noted the agency’s conservative stance on financial products.
This development aligns with Japan’s growing focus on cryptocurrency and Web3. Prime Minister Shigeru Ishiba recently highlighted their role in addressing economic and social challenges during a House Budget Committee meeting, emphasizing the need for user protection in digital finance. Akihisa Shiozaki, the Liberal Democratic Party’s Web3 chief, raised concerns over Japan’s strict crypto tax policies, arguing that they hinder innovation and competitiveness. He cited Donald Trump’s Bitcoin reserve proposal as an example of how other nations promote crypto adoption.
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