Japan has approved a major rewrite of its cryptocurrency regulations. The reform moves much of the country’s crypto framework from the Payment Services Act to the Financial Instruments and Exchange Act, bringing spot crypto trading closer to the rules applied across Japan’s investment markets.
Project executives, exchange employees and other people with access to material non-public information may face penalties if they trade before that information is released.
The law also introduces stronger disclosure requirements, expands oversight of crypto lending and investment advice, and gives regulators more authority to pursue unregistered businesses.
Despite the headlines, Japan has not simply declared every cryptocurrency a security. Most of the new rules are also not yet in force. The legislation establishes the framework, while detailed implementation will depend on regulations and guidance expected before the main provisions take effect.
Has Japan’s New Crypto Law Passed?
Japan’s Cabinet approved the new crypto law on April 10, 2026, and submitted it to the National Diet on the same day. Parliament passed it on July 15. The legislation was formally promulgated on July 23 as Act No. 64 of 2026, according to the Cabinet Legislation Bureau’s published-law register.
That means the reform is no longer a proposal. However, passage and implementation are separate stages.
Most provisions will take effect on a date specified by Cabinet Order within one year of promulgation. The main crypto framework is therefore expected to begin during 2027, although the government has not yet announced one final implementation date.
Some enforcement provisions, including parts of the increased penalties for unregistered operators, are scheduled to take effect 20 days after promulgation.
Why Is Japan Moving Crypto Under the FIEA?
Japan has historically regulated spot crypto activity primarily through the Payment Services Act. That framework treated crypto assets mainly as a payment and transfer instrument, even as most Japanese users increasingly held them for investment.
The Financial Services Agency found that this approach no longer reflected how the market operated. Its policy materials noted concerns about unclear white papers, information that did not match deployed code, fraudulent investment advice and the absence of a comprehensive statutory insider-trading regime.
The new law places crypto trading within the Financial Instruments and Exchange Act, commonly known as the FIEA. The objective is to improve disclosure, trading fairness and investor protection while maintaining rules tailored to digital assets.
The reform does not make every cryptocurrency a conventional security. Crypto assets will have their own category under the FIEA, separate from stocks, bonds and security tokens.
This distinction affects how individual tokens are regulated, particularly whether they have an identifiable issuer or controlling organization.
What Counts as Crypto Insider Trading?
Japan’s new rules prohibit people in privileged positions from trading covered crypto assets while holding material information that has not been made public.
The restriction can apply to officers and employees of token issuers and trading platforms. Shareholders, contractors, parties involved in business negotiations and people who receive information directly from an insider may also fall within its scope.
Material information can include changes to a token’s technical specifications, new issuance, service suspension, business partnerships, dissolution, bankruptcy and major security incidents.
Information involving trading platforms can also qualify. Examples include a decision to list or delist an asset, an unauthorized transfer of customer funds or a serious operational failure.
Large trades may create another category of sensitive information. A person who knows that a market-moving transaction will be executed or cancelled could be restricted from trading before that information becomes public.
The law also prohibits certain forms of information sharing and trade recommendations. An insider may therefore face scrutiny even without placing the trade personally if confidential information was passed to someone else for trading purposes.
Insider-trading violations may carry imprisonment of up to five years, a fine of up to 5 million yen, or both. Administrative penalties tied to the financial benefit of the violation may also apply.
Which Crypto Assets Are Covered?
The insider-trading rules focus on assets handled by registered Japanese crypto trading operators. They can also cover a token after an exchange has approved its listing but before the listing decision is announced.
An important distinction applies to what the law calls “specified cryptoassets.” These are generally tokens with an identifiable issuer or entity that remains materially involved in issuance and management.
Such issuers face broader information-management and disclosure obligations. Tokens issued through an IEO or operated by a clearly identifiable project company are likely candidates.
Bitcoin and Ether are generally not expected to qualify as specified cryptoassets because they do not have conventional issuers. This does not place all BTC or ETH trading outside the rules. Confidential information held by a Japanese exchange, such as an upcoming change in asset support or a major security incident, may still be relevant.
The classification of less decentralized projects will require closer examination. A foundation structure or claims of decentralization may not be enough if one organization continues to control important decisions.
DEX and Peer-to-Peer Trades Are Not Automatically Exempt
Japan has not introduced comprehensive direct licensing rules for decentralized exchanges under this reform. Authorities acknowledged that some protocols operate with little continuing human control after deployment.
However, the absence of direct DEX licensing does not create an insider-trading exemption.
A person trading a covered asset on a DEX while holding material non-public information may still fall within the prohibition. Direct transactions between users can also be included.
Regulators are continuing to examine businesses that provide interfaces connecting Japanese users to decentralized protocols. Future measures could require those providers to introduce risk warnings, identity checks or anti-money laundering controls.
This leaves an important distinction: the protocol itself may not be directly regulated as a trading operator, while the people using it and the companies providing access can still have legal obligations.
Token Issuers Will Face New Disclosure Requirements
Japan’s current framework relies heavily on exchanges and industry self-regulation to review white papers and provide token information. The amended FIEA introduces statutory disclosure requirements.
Specified cryptoasset issuers may need to publish information about a token’s function, supply, technical structure and associated business. They may also need to provide financial information and explain material risks.
Issuers will generally have ongoing obligations to publish annual information and disclose significant events promptly. A security breach, protocol change or disruption to the underlying service could require an ad hoc update.
For certain public offerings, disclosed information may require an independent audit unless the amount raised falls below a specified threshold.
False or misleading information can result in civil liability and administrative penalties. A trading operator that knowingly publishes materially false issuer information may also face consequences.
For assets without an identifiable issuer, the exchange or trading operator may need to prepare and publish the relevant information itself.
Exchanges Will Become Financial Instruments Businesses
Registered crypto exchanges will transition from cryptoasset exchange service providers under the Payment Services Act to cryptoasset trading businesses under the FIEA.
The new category brings obligations similar to those imposed on traditional financial companies, adjusted for the risks of crypto markets.
Operators will need systems to review the assets they handle and detect unfair trading. They will also be required to establish and publish best-execution policies explaining how customer orders are processed.
Custody protections will remain, including segregated management of customer assets. Additional duties of care, net-capital requirements and operational risk controls will be introduced.
The law also requires operators to build contingency reserves connected to the risk of unauthorized asset outflows. The exact reserve formula has not yet been determined. Regulators are expected to consider the amount of assets under custody and the quality of an operator’s security systems.
Existing exchanges will receive a transitional period after the law takes effect. However, conduct and supervisory obligations are expected to apply during that period, meaning platforms cannot postpone compliance work until their new registration is complete.
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Crypto Lending and Wallet Providers Face New Oversight
The reform expressly brings crypto borrowing and lending into the regulated trading-business framework. Platforms offering lending or yield-related services may need to explain counterparty credit risk, staking penalties and how customer assets are used. If customer crypto is lent to another party, the platform may be required to obtain advance written consent.
This is likely to increase compliance costs for lending products. It could also improve transparency around an area where users have often struggled to determine who ultimately controls their assets.
Companies that continuously provide wallet or custody-related systems to regulated platforms may be required to notify authorities and follow information-security and duty-of-care standards.
Trading operators will also need procedures for selecting and monitoring these external technology providers. This extends regulatory attention beyond the exchange itself to parts of the infrastructure used to safeguard customer assets.
Investment Advice and Paid Crypto Promotion Are Also Addressed
Businesses providing investment management or investment advice involving crypto assets will move more clearly into Japan’s licensing regime.
The change could affect professional advisers, digital asset treasury consultants and software services that provide individualized trading recommendations. General educational content is not automatically investment advice, but businesses directing client investment decisions may need to examine their licensing status.
The law also introduces rules addressing undisclosed paid promotion. Influencers and other commentators who receive compensation from issuers, underwriters or large traders may be required to disclose that relationship when expressing investment opinions.
This part of the reform is aimed at marketing that appears independent while being funded by a party with a financial interest in the token.
Does the Law Approve Crypto ETFs in Japan?
No. The July reform does not by itself approve a Japanese spot Bitcoin ETF or any other specific crypto fund.
Moving crypto into the FIEA creates a more suitable legal foundation for regulated investment products. Work on crypto ETF rules is progressing separately, but a concrete product would still require the relevant legal framework, exchange rules and regulatory approval.
The same caution applies to leverage. Japan’s current leverage limit for individual crypto derivatives remains 2x. Discussion about raising that limit does not mean a change has been adopted.
Conclusion
Japan’s 2026 crypto reform marks a genuine change in how the country views digital assets. The new framework recognizes that crypto is now used primarily as an investment rather than only as a payment method. It introduces statutory insider-trading rules, issuer disclosures, stronger exchange oversight and heavier penalties for unregistered businesses.
At the same time, the limits of the reform are important. Crypto assets are receiving a separate category under the Financial Instruments and Exchange Act, not being universally classified as securities. DEX protocols are not comprehensively licensed, spot crypto ETFs have not yet been approved and the expected 20% tax treatment is not yet in effect.
The law has passed, but the practical work is still ahead. Cabinet Orders, agency rules and industry guidance will determine how Japan’s new crypto market operates when the main provisions take effect in 2027.
Frequently Asked Questions
Has Japan passed its new cryptocurrency law?
Yes. Japan’s National Diet passed the legislation on July 15, 2026. It was promulgated on July 23 as Act No. 64 of 2026.
Are the new crypto rules already in effect?
Most provisions are not yet in effect. The government will set the main implementation date by Cabinet Order within one year of promulgation, so the broader framework is expected to begin in 2027. Some enforcement provisions take effect earlier.
Does Japan now classify every cryptocurrency as a security?
No. Crypto assets will be regulated as a separate category under the Financial Instruments and Exchange Act. This does not automatically make Bitcoin, Ether or every other cryptocurrency a conventional security.
