Analysis: Japan will reclassify the encryption as financial products

Japan takes an important step towards reshaping its approach to organizing the cryptocurrency. By 2026, the Financial Services Agency (FSA) plans to reclass the encryption assets as financial products under the Financial and Stock Exchange Law. This shift will unify cryptocurrencies within the framework of the organization itself, such as stocks and bonds, which exposes them to the rules of trading from within and more stringent supervision.

The decision reflects the changing position of Japan on digital assets. It was initially recognized as a method of payment, the cryptocurrency grown to become an investment category with an increase in the market impact. Since Blockchain technology and non -cash transactions gain momentum, it appears that the inclusion of encryption into the wider financial system is logical progress. However, this re -classification also raises questions about reaching markets, protecting investors, and a long -term influence on innovation in the sector.

Japanese encryption regulations have changed

Japan has a history in the organization of encrypted currencies. In 2016, Bitcoin admitted as a legal form of payment under the payment services law. However, the organizational framework treats encryption primarily as a method of payment, not an investment means.

Over time, with market growth, challenges such as fraud, manipulation and unclear regulations have emerged. By the end of 2024, Japan had about 11.8 million encryption accounts, an increase of about three million over the previous year. The country occupied 23 worldwide in adopting encryption, along with South Korea and Hong Kong.

Striving rules aim to reduce risks

FSA decision reflects an attempt to address market risks. Re -classification of encryption assets because financial products will bring them under the most stringent regulations, including the ban on trading from within. This step follows similar trends in other regions.

In the United States, the Securities and Stock Exchange Committee (SEC) followed legal measures against companies to provide symbols classified as securities. The European Union markets in the framework of encryption (MICA) also provided comprehensive regulations for digital assets.

Pressure for a non -cash economy

Japan promotes a non -critical economy for more than a decade. In 2019, non -cash transactions constituted 26.8 % of total payments.

By 2023, this number increased to 39.3 %, reaching 126.7 trillion yen (885 billion dollars), according to the Ministry of Economy, Trade and Industry. The government aims to increase this to 40 % by 2025. Blockchain technology is expected to play a role in achieving this goal.

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The possibility of traded investment funds and tax reducing

One of the expected effects of the new regulations is the possible approval of the boxes circulating in the exchange of encryption (ETFS). This is currently prohibited in Japan. Legislators also discuss reducing the tax on encryption gains from 55 % to 20 %, while keeping pace with stock investments.

Currently, taxes are imposed on encryption profits as a varied income, which leads to high tax rates. The reduction can attract more investors and increase liquidity in the Japanese market.

Institutional investment can increase

The introduction of investment funds in coding can encourage institutional investment. In the United States, Spot Bitcoin Etfs, adopted in early 2024, witnessed a rapid adoption, with more than $ 10 billion in assets accumulated within six months.

If Japan follows a similar path, its market may suffer from significant growth. FSA has been conducting closed discussions with legal and financial experts since October 2024. The agency plans to finish the touches on the direction of politics by June 2025, with legislative changes in 2026.

Retail investors may face restrictions

The new classification raises concerns about the restrictions imposed on retailers. FSA has already taken steps to reduce access to unregistered foreign exchanges. In 2024, he asked Apple and Google to remove five platforms – Bybit, Kucoin, Mexc Global, LBANK and Bitget – from application stores in Japan.

While this procedure aims to protect investors, it may also reduce the options of those looking for codes that are not listed in local stock exchanges. Some investors can turn into unorganized platforms, which increases risk exposure.

Compatibility with global encryption regulations

The re -classification is in line with the broader financial and economic policies in Japan. In 2022, FSA provided regulations for FIAT.

In April 2024, corporate tax exemptions were offered to unrealized encryption gains, which encourages companies’ participation in the sector. These developments indicate an organized approach to integrating digital assets into the economy.

Globally, other regions also tighten encryption regulations. The United States, the European Union and Singapore have provided risk management parties while enhancing innovation. Japan’s approach can affect other Asian markets, which constitutes regional regulatory trends.

Public reactions remain divided

General reactions are mixed with FSA decision. Some see it as a necessary step towards stability and institutional adoption. Others are concerned about excessive regulation that restricts market growth.

The balance between censorship and innovation will be extremely important in determining the impact of these changes. Japan’s approach in the coming years will be closely monitored as a model for future encryption regulation.