Japan’s FSA Considers Classifying Crypto as Securities
Japan’s FSA has begun holding closed-doors discussions toward classifying all cryptocurrencies as “financial products,” similar to the treatment of security instruments, several Japanese news media outlets reported Tuesday. The expected shift in posture could have an immediate impact on Japan’s crypto industry, not least the fact that Bitcoin and Ethereum ETFs may be ready to hit town.
Regulatory Review Undergoes
The review is supposed to make decisions on whether existing securities laws under FIEA apply to cryptocurrencies or if there should be a new regime governing them. It is also looking at whether any such regulations will apply to all digital assets or only to major ones such as Bitcoin and Ethereum.
A formal policy direction is thus expected by June 2025, to be followed by consultations with the Financial System Council, which advises the FSA. A legal amendment could be proposed as early as 2026, though this is not certain.
Implications for Retail Investors and ETFs
If classification of cryptocurrencies as securities, on one hand, could bring more severe investor protection, it could make access quite impossible for retail investors due to increased regulatory compliance. On the contrary, this would pave the way for Japan’s approval of spot Bitcoin ETFs, following the U.S.
The onshore study group, in October 2024, recommended prioritizing Bitcoin and Ethereum ETFs while revising the tax policy in order to facilitate more institutional investment. If enacted, such recommendations are likely to catapult Japan into the front ranks of crypto-based financial products.
SoftBank’s Crypto Expansion Amid Changing Regulations
Japanese investment giant SoftBank has been actively expanding its involvement in the crypto sector. The company recently backed Cipher Mining, securing an option to acquire a 300MW data center site in Texas.
SoftBank’s crypto investments are aligned with the company’s bigger strategy, as the company reported steady financial growth. For the nine months ending December 2024, SoftBank’s net income rose 7.4% year-over-year to 436.6 billion yen.
The Future of Crypto Regulation in Japan
As Japan’s FSA continues evaluating its stance on crypto, potential regulatory changes could reshape the country’s digital asset landscape. The approval of Bitcoin ETFs and clearer legal frameworks may attract institutional investors, signaling Japan’s growing role in the global crypto economy.
