Japan passes crypto amendments: digital assets included in financial regulations

Deep Tide TechFlow message: On July 16, according to Cointelegraph, Japan’s parliament has passed amendments to the Financial Instruments and Exchange Act, officially classifying crypto assets as financial assets and replacing the prior Payment Services Act framework. The new rules introduce restrictions on crypto insider trading, requiring market participants such as exchanges and issuers not to trade using material nonpublic information. The rule design is aligned with traditional financial markets.

The amendments significantly increase penalties for violations. For unregistered operating entities, the maximum prison term has been raised from 3 years to 10 years, and fines have been increased from about 300 million yen ($19,000) to about 1000 million yen. Insider trading violations can result in up to 5 years’ imprisonment or a fine of 5 million yen. At the same time, the term for registered entities has been changed from "crypto currency exchange" to "crypto currency trading company," reflecting regulators’ renewed redefinition of the industry’s financial nature.