Japan’s financial regulator plans to reclassify the legal status of cryptocurrencies to combat insider trading. The Financial Services Agency plans to submit a bill to Congress next year.
The bill makes some legal tweaks, but could apply to everything from BTC to low-cap meme coins. In 2026, the Financial Services Agency also plans to form a new cryptographic authority, which could help address future concerns.
Japan’s new virtual currency rules
Insider trading has long been a problem in the crypto industry, but several recent incidents seem to have made it even worse. Last Friday, an unidentified whale made a huge profit from President Trump’s Black Friday tariff announcement, sparking widespread community outrage.
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But while the idea that “crime is legal” has become dominant in the United States, some countries are determined to stop this trend from spreading. Today, local media reported that Japan is preparing a bold move aimed at completely reclassifying cryptocurrencies to prevent insider trading.
Significant legal adjustments
Japan’s main cryptocurrency regulator, the Financial Services Agency (FSA), has been aiming to ease restrictions on Web3 for several months. Still, this does not suggest that the country is prepared to take a laissez-faire approach to criminal activity.
If the Financial Services Agency’s new initiative is successful, cryptocurrencies will be reclassified under Japanese law. Digital tokens would be a financial product rather than a “payment instrument” and would probably be classified differently than securities.
This measure will allow the Financial Services Agency to impose new regulations and punish insider trading cases. Although such solutions are elegant, they do not always come true.
The Financial Services Agency plans to submit a bill to the Japanese Diet in 2026 that calls for amending the position of virtual currencies in the Financial Instruments and Exchange Act. It also underwent organizational restructuring during the same year, establishing a new secretariat for cryptocurrencies and Web3.
In other words, legal hurdles could hamper this reclassification effort, and on the optimistic timeline, this is still a long way off. Nevertheless, Japan’s financial regulators are taking the use of cryptocurrencies in insider trading very seriously.
We hope this effort will serve as a model for curbing rampant Web3 crime.
