Japan Considers Redefining Cryptocurrencies as Financial Products to Combat Insider Trading

According to a Nikkei report, Japan’s Financial Services Agency (FSA) is looking to reclassify cryptocurrencies as financial products in order to address issues related to insider trading within the digital currency markets.

This initiative is part of a larger strategy aimed at enhancing regulatory oversight of Japan’s cryptocurrency sector, which has been experiencing increased adoption amid a rise in fraudulent practices.

Key Points:

• The FSA intends to propose amendments to the Financial Instruments and Exchange Act (FIEA) to the Japanese parliament as soon as 2026 after a thorough review.
• Currently, cryptocurrencies are classified as a “means of settlement” under the Payment Services Act, effectively regulating their use as payment tools instead of investment assets.
• This existing classification has highlighted gaps in regulatory coverage, especially regarding activities such as insider trading.
• Specifics on the proposed insider trading regulations, including definitions of insider information and penalties for breaches, have yet to be clarified, indicating room for additional details as the proposal progresses.