Japan classifies crypto as financial products in new law

Japan's parliament has enacted sweeping revisions to its financial laws, formally classifying cryptocurrencies as financial products and establishing a new regulatory framework with stricter oversight, tougher penalties, and a path to lower taxes and domestic exchange-traded funds. The amendments to the Financial Instruments and Exchange Act were approved by the House of Councillors on Wednesday, July 15, 2026, completing their passage through the Diet.

The legislation marks a fundamental shift in Japan's approach to digital assets, moving them from regulation under the Payment Services Act, which treated them primarily as payment instruments, to a new category alongside traditional financial products like stocks and bonds. This reclassification brings the sector closer to conventional finance and introduces several key changes.

A central component of the new framework is the introduction of insider trading rules for crypto transactions, prohibiting trading based on undisclosed material information. The law also significantly increases penalties for operating an unregistered crypto business, raising the maximum prison sentence from three years to ten years and increasing fines...