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Japan passes overhaul to bring crypto under financial rules
The revised Financial Instruments and Exchange Act adds insider trading restrictions and increases potential penalties for unregistered crypto businesses.
Japan’s parliament passed revisions to the Financial Instruments and Exchange Act that will bring crypto assets under a framework closer to traditional finance, Cointelegraph reports. The changes classify crypto assets as financial assets under the FIEA, shifting oversight away from the Payment Services Act, which had treated digital assets primarily as payment instruments.
The revised rules introduce insider trading restrictions covering issuers, exchanges, and other market participants, barring trading while aware of undisclosed material information. Cointelegraph also reports that the overhaul increases compliance obligations for crypto businesses operating in Japan, aimed at improving market integrity and protecting users.
Japan is also set to raise penalties for noncompliance, including increasing the maximum prison sentence for operating without registration from three years to 10 years, and lifting fines from around 3 million Japanese yen to around 10 million yen, according to Cointelegraph. For insider trading violations, the report says penalties could include up to five years in prison and fines up to 5 million yen, or both.
The revisions also reportedly change the terminology for registered businesses from “cryptocurrency exchange” to “cryptocurrency trading company,” reflecting regulators’ broader view of the sector’s financial role, Cointelegraph notes. The law passed on Wednesday marks one of Japan’s biggest shifts in its digital asset policy.