In a recent financial update, Japan’s financial regulatory authority, the Financial Services Agency (FSA), announced that it is planning to give crypto assets legal status and prohibit buying and selling based on undisclosed internal information. According to Nikkei Business Daily, Japan is considering revising its Financial Instruments and Exchange Act to regularize cryptocurrency. Notably, Nikkei did not cite any source for the news. Reuters posted this news, highlighting that the FSA will submit a bill to parliament in 2026 to amend the Financial Instruments and Exchange Act.
Crypto Assets
A crypto asset is the digital representation of value or right that can be electronically transferred or stored. Crypto-assets can be used as a means of payment and they are faster and more efficient means of payment by limiting intermediaries, especially in cross-border situations.
Crypto Assets in Japan
Japan was the first country to regulate crypto assets after the Mt.Gox debacle. However, in 2018, cyberattacks misappropriated funds amounting to $580 million. This incident led to the establishment of the Japan Virtual Currency Exchange Association, a self-regulatory body that governs crypto asset exchange.
Currently, under Japanese law, crypto assets are not constituted as ‘securities’. However, the person having a crypto asset is required to register with the Financial Services Agency.
According to Payment Services Act (PSA), Crypto Asset Exchange Services means that following acts could be carried out as crypto business.
- Sale and purchase of crypto assets
- Intermediating
- Management of customers’ money
Crypto Assets Legalized in EU
In 2020, the European Union adopted a comprehensive legislative framework, the ‘2020 digital finance strategy,’ to regulate the issuing of crypto assets and crypto services. Through this strategy, the Regulation on the Markets in Crypto-Assets (MiCA) was passed to cover services not covered by the Union’s legislative acts on financial services. Though Nikkei broke the news that Japan is considering legalizing crypto assets, it has not yet provided the framework for this. Japan has a long history of regulating crypto assets. Now, it is to be seen how the country will give a legal status to a digital commodity.
