Japan is getting closer to officially recognizing crypto as a financial product, marking an important turning point in the regulation of the digital asset market. This move will not only affect domestic investors but also have widespread implications for the global crypto industry.


From payment methods to financial products

Currently, cryptocurrencies such as #bitcoin in Japan are still classified as payment methods under the Payment Services Act, a legal framework established in 2016 following the collapse of the Mt.Gox exchange. However, with the explosion in the number of trading accounts and the growing interest from investors, the Japanese government believes it is time to change the approach.


To meet the regulatory demand, the Financial Services Agency of Japan (#FSA ) is drafting a proposal to amend the Financial Instruments and Exchange Act. If passed, this will be the first time Japan views crypto as a financial investment product rather than just a payment method as it is now.


How will the new law affect the market?

One of the significant changes in this bill is the expansion of the scope of control, including companies and organizations that raise funds and market crypto investments. This means that not only exchanges but all organizations related to digital assets must register with the FSA to operate legally.


In addition, the bill also proposes to ban insider trading, applying similar control standards as with traditional securities. This aims to protect investors and prevent market manipulation in crypto, an issue that has been controversial in the industry for many years.


Another noteworthy point is that the regulations will apply to all companies providing services to Japanese citizens, regardless of where they are headquartered. However, the enforceability against businesses operating from abroad remains a big question mark.


Japan is following the global trend

Not only Japan, but many other countries are also accelerating the completion of the legal framework for crypto:



  • South Korea: The Financial Services Commission (FSC) is expected to issue a crypto investment framework for institutions in Q3/2025, facilitating banks and financial businesses to participate in the market.



  • Cayman Islands: One of the legal havens for crypto is tightening regulations by requiring virtual asset service providers (VASP) to register for licensing with the Cayman Islands Monetary Authority (CIMA).



  • Vietnam: The Ministry of Finance is expected to submit a draft legal framework for crypto to the Government in March 2025, which includes a proposal to pilot a digital asset exchange.




Impact on the crypto market

According to data from #Nikkei , by January 2025, Japan had approximately 7.34 million active crypto trading accounts, more than tripling from five years ago. If the new law is passed, the crypto market in Japan may face short-term volatility due to investor reluctance. However, in the long run, the recognition of crypto as a financial product could help legalize and attract institutional capital, enhancing trust in the market.


The bill is expected to be presented to the Japanese National Assembly as early as 2026, after completing analysis rounds with experts. If passed, this will be an important step forward, not only for Japan but also for the entire global crypto industry.