Japan Law Recognizes Crypto as Financial Products

Japan's upper house passed amendments to the Financial Instruments and Exchange Act on July 15, completing the bill's journey through both chambers of the National Diet. The vote officially classifies cryptocurrencies as financial products, shifting their legal status from payment instruments.

The reform brings crypto under the same regulatory umbrella as securities and derivatives. That means exchanges and custodians will face stricter disclosure rules, capital requirements, and investor-protection obligations. The Financial Services Agency (FSA) gains expanded oversight authority, including the power to inspect platforms and demand business-improvement orders.

Industry groups had pushed for the change, arguing the old payment-services framework left gaps in consumer safeguards. The new law also introduces a registration system for crypto custodians and requires exchanges to segregate customer assets from their own.

The amendments take effect within 18 months, giving firms time to adjust compliance systems. The FSA said it will issue detailed implementation rules before the deadline.