Japan is advancing a regulatory reform for crypto assets, primarily shifting the oversight of crypto assets under the current Payment Services Act into the framework of the Financial Instruments and Exchange Act. As assets like Bitcoin are increasingly viewed by institutions as investment targets, this adjustment signifies Japan’s effort to more clearly integrate crypto assets into its financial market regulatory system.
The bill has entered Senate review.
According to reports, the bill was approved by Japan's Cabinet on April 10 and passed by the House of Representatives on June 11. It is currently under review by the House of Councillors and is expected to take effect in 2027.
- April 10: Japan's Cabinet approves the bill
- June 11: House Passes Consideration
- Expected in 2027: New regulations officially take effect
If the reform is implemented, crypto assets in Japan will be classified as a distinct category of financial products, with regulatory focus shifting further from their payment tool characteristics to their investment product attributes.
Regulatory focus shifts to disclosure and trading activities
Under the proposed direction, the new rules will cover disclosure requirements, market manipulation, insider trading, and stricter regulation of service providers. These measures aim to enhance market transparency and strengthen investor protection.
This change is also seen as a step by Japan to pave the way for financial products such as crypto ETFs. Following the approval of spot Bitcoin ETFs in the U.S., institutional holdings have significantly increased, strengthening the connection between crypto assets and traditional asset management systems. Japan’s recent adjustment reflects the regulator’s response to these market developments.
DeFi or regulation classified by actual control relationships
In the decentralized finance space, regulatory challenges remain greater. Citing XWIN Research Japan, the report suggests that lawmakers are unlikely to apply the same set of rules uniformly to all DeFi activities; instead, they are more likely to assign responsibility based on “who is actually controlling or influencing users.”
This means that protocol developers, front-end interface operators, wallet service providers, DAOs, and token issuers may face different obligations in the future. Regulatory approaches are becoming more focused on function and control, rather than solely on whether a project claims to be “decentralized.”
The current bill does not directly cover self-custody or many specific scenarios involving DeFi. These aspects are expected to be further clarified in subsequent supporting regulations and regulatory guidance.