Japan’s government amended the Financial Instruments and Exchange Act on Friday, formally classifying crypto assets as financial instruments alongside traditional securities.

The move shifts crypto out of the payments category, where it had previously sat under the Payment and Settlement Act, and into the same regulatory framework as Japan’s stock market.

What the amendment covers

The updated law bans insider trading and other activities involving buying or selling based on undisclosed information.

Crypto issuers will now be required to disclose information at least once a year, bringing transparency standards closer to those applied to listed companies.

Fines and sentences for unregistered crypto exchanges have also been increased under the amendment.

Government’s stated goals

Finance Minister Satsuki Katayama addressed the changes at a press conference following the Cabinet meeting:

“We will expand the supply of growth capital in response to changes in financial and capital markets, and ensure market fairness, transparency, and investor protection.”

Katayama had signaled the direction of travel back in January, saying the role of exchanges and market infrastructure would be essential for citizens to benefit from digital and blockchain-based assets.

The government also backed plans in December to cut Japan’s maximum tax rate on crypto profits to a flat 20%.

Crypto ETFs on the horizon

Japan is planning to legalize crypto exchange-traded funds by 2028, according to a January report.

Major financial groups including Nomura Holdings and SBI Holdings are among the first companies expected to develop crypto-linked exchange-traded products, marking a significant step toward mainstream institutional adoption in the country.