Japan moved crypto asset regulation into the framework of its financial markets legislation. The reform introduced disclosure requirements, participant registration, regulatory oversight, and insider trading restrictions while explicitly distinguishing crypto assets from securities.
Both chambers of Japan’s Parliament approved a reform that fundamentally changed the country’s approach to crypto asset regulation. Instead of being governed by the Payment Services Act, the industry will now fall under the Financial Instruments and Exchange Act. At the same time, lawmakers emphasized that crypto assets will be treated as a financial product that is distinct from securities and regulated according to their specific characteristics.
According to the legislative materials prepared by Japan’s Financial Services Agency (FSA), crypto assets have effectively become an investment product. The number of domestic crypto trading accounts exceeded 14 million, while about 70% of users reported annual income below ¥7 million. As a result, the government decided to strengthen investor protection by moving key regulatory provisions from payment services legislation into financial markets law.
The key changes include:
- Mandatory disclosure of information about crypto assets before they are offered or traded
- Crypto asset trading activities will become part of the regulated financial services sector
- Crypto intermediaries will be brought under the financial intermediary regulatory framework
- Insider trading rules will apply to crypto assets
- Unregistered market participants will face stricter penalties
The bill also introduced the concept of a “special crypto asset,” referring to an asset issued under the control of a specific issuer. Issuers of these assets will be required to publish disclosures at issuance and sale, as well as provide ongoing periodic and event-driven disclosures after distribution.
Crypto exchanges and other market participants will be subject to a regulatory framework broadly comparable to that applied to Type I financial instruments businesses under the Financial Instruments and Exchange Act. They will be required to implement risk management systems, safeguard client assets, oversee the information systems they use, and maintain reserves for operational incidents. For example, if crypto assets are lost because of a security breach, companies must maintain compensation reserves to reimburse affected customers.
Beyond the crypto sector, the bill also introduced several broader reforms. These include mandatory sustainability-related disclosures and assurance requirements for certain large companies, an increase in the exemption threshold for securities registration statements from ¥100 million to ¥500 million, and expanded fundraising opportunities for startups.
The law’s main provisions will take effect on a date determined by the Japanese government, but no later than one year after its official publication.
The Japanese government first presented plans to recognize crypto assets as financial instruments through legislation in April 2026 as part of its efforts to strengthen investor protection and improve market transparency.
