Japan's Financial Services Agency is planning to propose officially classifying crypto assets as financial products as part of new regulations on crypto insider trading, Nikkei reported Sunday.

The FSA aims to propose amendments to the Financial Instruments and Exchange Act to parliament as early as 2026, following closed-door expert analysis of the current legal framework, according to the report. As of today, Japan classifies cryptocurrencies as a means of settlement under the Payment Services Act. 

With the potential rule change, Japan's financial regulator seeks to tighten its grip on local crypto service providers as it sees increased cases of scam cryptocurrencies, the report said. 

Classifying crypto as a financial product would mean that not only exchanges but also companies soliciting crypto investment would need to register with financial regulators.

According to Nikkei, the upcoming bill would likely place crypto assets in a different category from other securities, such as stocks and bonds, while the insider trading rules are expected to take a similar form to those governing conventional financial products. Details regarding the insider trading regulations have yet to be revealed.

While the FSA aims to apply new rules to companies servicing local citizens regardless of their locations, it is unclear how the agency plans to enforce regulations on foreign entities. 

Last month, the FSA formally requested Apple and Google to block five unregistered overseas crypto exchanges on their respective app stores in the country for the first time.

As of January 2025, Japan had around 7.34 million active accounts for crypto trading, Nikkei reported.

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