Japan's move to include cryptocurrencies in the Financial Instruments and Exchange Act, along with closing insider trading and disclosure gaps, is a long-term positive for compliance and institutional entry, but the costs for small and medium-sized project teams and exchanges will soar.

(FSA) Previously regulated cryptocurrencies under the "Funds Settlement Act," using payment methods as the basis for supervision.
As the investment purposes of cryptocurrencies continue to expand, the proportion of users holding them for profit has significantly increased, and the current regulatory framework can no longer effectively protect investors' rights and interests.
Against this background, the Financial Services Agency has decided to transfer the regulatory framework to the "Financial Instruments and Exchange Act," placing cryptocurrencies on equal legal footing with stocks, bonds, and other traditional financial products, and related industry players will also face compliance standards similar to traditional financial institutions.
This transition also brings Japan's cryptocurrency regulatory structure closer to the mainstream financial regulations of major G7 economies.
Core provisions of the amendment: strengthened obligations and upgraded penalties
Main changes in this amendment include:
Insider trading ban: Explicitly prohibit the use of material non-public information for cryptocurrency trading, filling gaps in current law.
Annual information disclosure obligation: Cryptocurrency issuers must regularly disclose financial and business information to regulators and investors.
Change of operator name: Registered operators are officially renamed from "Cryptocurrency Exchange Operators" to "Cryptocurrency Trading Operators."
Enhanced criminal penalties: The maximum prison term for unlicensed operators is increased from 3 years to 10 years, and the maximum fine is raised from 3 million yen to 10 million yen.