Draft amendments to Japan’s core financial laws would move crypto-assets out of a payments-led framework and into securities regulation, introducing disclosure and insider trading rules.
Japan is moving to regulate cryptocurrencies under its securities laws rather than its payments framework, after its cabinet approved draft amendments to existing financial legislation.
The bill, which will be submitted to the National Diet, proposes changes to the Financial Instruments and Exchange Act and the Payment Services Act, marking a structural shift in how crypto-assets are classified in the country.
If passed, the amendments would bring crypto-assets within the scope of Japan’s securities regime, placing them under rules more commonly applied to traditional financial instruments.
Japan has historically regulated crypto-assets under the Payment Services Act, positioning them primarily as a means of settlement following the collapse of Mt. Gox in 2014.
The proposed amendments would move oversight more firmly under the Financial Services Agency’s securities framework, aligning crypto-assets with investment products rather than payment tools.
This would represent a departure from Japan’s earlier approach, which distinguished crypto-assets from securities even as other jurisdictions began expanding regulatory definitions.
Disclosure and conduct rules
According to reported summaries of the draft legislation, the changes would introduce requirements typically associated with capital markets regulation.
These include disclosure obligations for issuers, including the publication of periodic information, as well as the application of insider trading restrictions to crypto-assets.
The latter would bring Japan in line with a growing number of jurisdictions seeking to address market abuse risks in digital asset markets by extending existing securities rules.
The cabinet’s approval marks the first formal step in the legislative process, with the bill now expected to be debated in parliament.
At this stage, the amendments have not yet been enacted, and further revisions may be introduced during Diet deliberations.
Full legislative text has not yet been published in English, with current details based on government summaries and reporting around the bill’s contents.
