Japan is making moves to classify cryptocurrencies as financial products, according to a report by Nikkei. The country’s finance regulator, the Financial Services Agency (FSA), is planning to submit a bill to parliament to revise the Financial Instruments and Exchange Act as early as next year.

This change would see cryptocurrencies fall under the same laws as other financial products, such as stocks, which prohibit insider trading. However, cryptocurrencies would likely be put in a separate category from securities like stocks and bonds.

If the changes are implemented, companies offering crypto would have to register with the FSA. The regulator plans to enforce these rules regardless of whether a company operates in Japan, but it is unclear how they would be enforced against overseas entities.

There are still details to be finalized, such as which cryptocurrencies would be regulated and how distinctions would be made between widely traded assets like Bitcoin and Ether, and more speculative and high-risk tokens like memecoins.

This move comes as Japan’s regulators and government have been making pro-crypto moves. Earlier this month, the country issued its first license allowing a company to deal with stablecoins, and the ruling Liberal Democracy Party is working on reforms to slash the capital gains tax on crypto and categorize digital assets as a distinct asset class.

In February, reports surfaced that the FSA was considering lifting a ban on crypto-based exchange-traded funds (ETFs) to align with the policy position of Hong Kong, which approved crypto ETFs for trading in April 2024.

Japan’s finance laws are likely to see significant changes in the coming years as the country continues to embrace and regulate the crypto industry. This could have a major impact on the global crypto market, as Japan is one of the world’s largest economies and a major player in the financial sector.

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