Japan is poised for significant changes to its cryptocurrency regulatory framework, aiming to treat digital assets like stocks under national law. The Financial Services Agency (FSA) plans to update the Financial Instruments and Exchange Act by 2026, according to a report by Nikkei on March 30th. This legislation would align cryptocurrencies with traditional financial instruments such as stocks in areas like insider trading laws while maintaining a distinct category for securities like equities and bonds. Details are still under discussion, but the proposed changes could significantly tighten oversight of digital asset transactions. Companies offering crypto services will need to register with the FSA, a move that would formalize compliance for both domestic and foreign entities. However, questions remain about how these regulations apply to firms operating outside Japan. Whether the rules will extend to all digital assets – from established cryptocurrencies like Bitcoin and Ethereum to more speculative tokens – remains unclear. This regulatory push follows a pro-crypto wave in Japan. Earlier this year, SBI VC Trade, part of SBI Holdings, became the first firm licensed to handle stablecoins in the country. The company plans to support Circle’s USDC, after it received approval for use in Japan. The Japanese ruling Liberal Democratic Party also supports digital asset adoption, proposing a reduced capital gains tax on crypto from 55% to 20%, and formally recognizing digital assets as a distinct asset class. In recent months, the FSA has shown increasing openness towards crypto through its proposed lifting of a ban on crypto exchange-traded funds (ETFs). This move aligns with recent developments in markets like Hong Kong which approved trading of crypto ETFs earlier this year. If implemented, these measures could reshape the landscape for businesses and investors in Japan, solidifying the country’s role as a leader in the global digital asset market.