Japan’s FSA Eyes Crypto as Securities in Sweeping Regulatory Overhaul: Report

The Financial Services Agency (FSA) of Japan is planning to recognize crypto assets as financial products equivalent to securities.

As such, the agency has reportedly initiated discussions within a closed study group comprising experts to assess the current regulatory framework governing crypto assets.

FSA’s Crypto Reform

According to a report by ‘The Nikkei’ on February 10, the FSA intends to determine the direction of potential system reforms based on the study group’s findings by the end of June, after which it will seek opinions from the Financial System Council, scheduled to convene in the autumn. Following these discussions, the agency aims to draft and submit a bill to amend relevant laws during the 2026 ordinary Diet session.

If the regulatory changes result in crypto assets being legally classified on par with securities, the approval of crypto asset spot exchange-traded funds (ETFs) in Japan may become a possibility. However, the specifics of the new framework remain under discussion.

The key focus includes whether to incorporate crypto assets into the existing securities framework outlined in the Financial Instruments and Exchange Act, introduce a new regulatory framework within the same law, or address them under the Payment Services Act.

Additionally, deliberations will determine the scope of crypto assets subject to regulation, including whether restrictions should apply only to major cryptocurrencies.

The debate over the classification of crypto assets has been ongoing. In August last year, the FSA Commissioner Hideki Ito stated that the approval of cryptocurrency-linked ETFs requires careful consideration. A few months later, Prime Minister Shigeru Ishiba adopted a cautious stance and questioned whether cryptocurrency should be made more accessible for public investment.

During the same period, however, the domestic cryptocurrency industry has pushed for regulatory clarity. In October, the Domestic Cryptocurrency ETF Study Group, for instance, published a set of recommendations advocating for the establishment of cryptocurrency ETFs in Japan.

Their proposals sought to prioritize major cryptocurrencies like Bitcoin and Ethereum, boosting the development of necessary regulatory frameworks and implementing a separate tax structure for cryptocurrency ETFs and spot transactions.

Reluctance For Bitcoin Reserves in Japan

Despite the latest news, Japan remains skeptical about adopting Bitcoin as part of its national reserves, citing concerns over security, liquidity, and volatility. Prime Minister Ishiba had recently stated that the country lacks sufficient information on international strategies, particularly from the US, making it difficult to take a definitive stance.

While global interest in Bitcoin reserves is rising, Japan’s government insists that its foreign exchange reserves prioritize stability. Meanwhile, the Government Pension Investment Fund is exploring Bitcoin for diversification.