Japan's inclusion of cryptocurrencies into the Financial Instruments and Exchange Act is a crucial step: it places them under the same level of regulation as stocks, with insider trading/disclosure/heavy penalties all in place, making compliance costly but beneficial for long-term inflow of capital.

(FSA) Previously regulated cryptocurrencies under the "Funds Clearing Law," using payment methods as the basis for supervision. As the investment uses of cryptocurrencies continue to expand, the proportion of users holding assets for profit has significantly increased, and the current regulatory framework has become insufficient to effectively protect investors' rights. Based on this background, the Financial Services Agency has decided to transfer the regulatory framework to the "Financial Instruments and Exchange Act," placing cryptocurrencies alongside stocks, bonds, and other traditional financial products in legal classification, and related industry players will face compliance standards similar to those of traditional financial institutions. This transition also brings Japan's cryptocurrency regulatory structure closer to the mainstream financial regulations of major G7 economies. Core provisions of the amendment: strengthened obligations and upgraded penalties.
Main changes in the amendment:
Insider trading ban: Explicitly prohibits trading cryptocurrencies using material non-public information, filling gaps in current law.
Annual disclosure obligations: Cryptocurrency issuers must regularly disclose financial and business information to regulators and investors.
Change of operator name: Registered operators are officially renamed from "cryptocurrency exchange operators" to "cryptocurrency trading operators."
Increased criminal penalties: The maximum prison term for unlicensed operators is increased from 3 years to 10 years, and the fine cap is raised from 3 million yen to 10 million yen.