Japan Prepares to Regulate Crypto as a Financial Product

Japan is reportedly moving closer to classifying cryptocurrencies as financial products.

According to a report Friday (April 10) from Nikkei, a draft amendment before the country’s Cabinet would place crypto assets under the Financial Instruments and Exchange Act, a framework used for stocks and securities.

Assuming the measure passes during the current legislative session, the law could go into effect as soon as fiscal 2027, the report said.

Before now, Japan’s Financial Services Agency (FSA) has regulated crypto under the Payment Services Act, due to the digital currency’s potential use as a payment method.

But with crypto becoming an investment instrument, the FSA wants to move regulation to the Financial Instruments and Exchange Act, the report said.

The new law will also create tougher penalties for crypto violations, the report said. For example, operating without registration could lead to a 10-year prison term, compared to the current three-year sentence. Fines would also be increased, from 3 million yen to up to 10 million yen (around $62,000).

In other digital asset news, PYMNTS wrote last week about new Federal Reserve research that shows the large majority of stablecoins aren’t flowing through the real economy. Instead, they are either sitting idle or circulating within cryptocurrency markets rather than being used to pay for goods and services.

A briefing released last week by the Federal Reserve Bank of Kansas City explores how stablecoins are actually used, based on data across industry platforms.

“The takeaway is blunt: payments barely register, while most activity remains inactive or tied up in financial infrastructure rather than commerce,” PYMNTS wrote.

These findings reinforce a pattern that PYMNTS Intelligence has chartered across corporate finance functions. In the March 2026 data book, “Stablecoins Gain Ground: Why CFOs See More Promise There Than in Crypto,” interest among executives in stablecoins continued to surpass actual deployment.

According to that report, more than 40% of middle-market firms say they have at least discussed or tested stablecoins, yet only 13% report actual use. The gulf between awareness and implementation highlights an ongoing hesitation among finance leaders. Stablecoins are seen as potentially useful, but not yet integrated into everyday financial operations.

“The data also helps explain the idle balances identified in the Fed’s research. Firms are not rejecting stablecoins,” PYMNTS wrote. “Instead, they are holding back until the operational case becomes clearer, particularly as they weigh how these tools would integrate with treasury systems and payment workflows.”