The Japanese government officially recognized crypto-assets as financial instruments at the legislative level. The initiative aims to strengthen investor protection and increase market transparency.
According to a Cabinet decision, cryptocurrencies will now be regulated under the Financial Instruments and Exchange Act. As reported by Nikkei, this includes a ban on insider trading and a requirement for digital asset issuers to disclose information at least once a year.
Until now, crypto-assets in Japan were regulated as a means of payment under the Payment Services Act. However, growing investment demand prompted a shift to a stricter regulatory framework. As part of the reform, the status of market participants will also change. Registered operators will be renamed from “crypto-asset exchange operators” to “crypto-asset trading operators.”
The bill brings significantly tougher penalties for violations. The maximum prison sentence for operating without registration will increase from 3 to 10 years. The upper limit for fines will more than triple, from 3 million yen (~$19,000) to 10 million yen (~$63,000). These measures are intended to strengthen market oversight and reduce the risk of abuse.
According to Japan’s Minister of Finance, Satsuki Katayama, the reform is designed to adapt to changes in financial markets, expand capital-raising opportunities, and ensure fairness, transparency, and investor protection. If approved by parliament, the new rules could come into force as early as fiscal year 2027.
In 2024, Japan’s Financial Services Agency (FSA) required local banks to strengthen controls over crypto transactions. Meanwhile, the country’s FinTech sector recorded annual growth of 14% in 2025 amid active digital transformation.
