Japan is getting closer to reforming its cryptocurrency regulations.

Japan is preparing a major overhaul of crypto regulations as the Financial Services Agency (FSA) considers reclassifying crypto from a payment tool to a “financial product” to enhance investor protection. This move stems from a significant rise in complaints, increasingly complex cyber attack risks, and the number of crypto accounts increasing fourfold to 13 million in 5 years.

The transfer of management from the Payment Services Law to the Financial Instruments Law will impose stricter disclosure requirements, protect against insider trading, and establish criminal penalties. The research group also proposed a fixed tax of 20% on crypto profits, equivalent to stocks. Experts believe that the crypto market currently operates more like securities than payments, but warn that viewing all tokens the same—particularly not distinguishing Bitcoin—could burden smaller exchanges and reduce Japan's competitiveness.