Japan Reportedly Could Place Crypto Under Insider Trading Rules

Cryptocurrencies could soon be considered financial products under Japanese law.

The country’s Financial Services Agency (FSA) is working on revising the Financial Instruments and Exchange Act to change the legal status of crypto assets, the Nikkei reported on Sunday (March 30), without citing specific sources.

According to the report, the change would place cryptocurrencies under Japan’s insider trade prohibitions. The FSA could send a bill to amend the legislation to Japan’s parliament as early as next year, the report said.

The Nikkei adds that that agency has been mulling changes to the current system in closed-door study sessions with experts.

The shift comes amid a larger push among regulatory agencies to shift their approach to governing digital assets.

For example, the U.S. Commodity Futures Trading Commission (CFTC) said last week that digital asset derivatives will now receive the same regulatory treatment as other products.

Also last week, the Federal Deposit Insurance Corp. (FDIC) issued new guidance that allows financial institutions under its supervision to engage in crypto-related activities without prior FDIC approval, so long as they adequately manage the associated risks.

“With today’s action, the FDIC is turning the page on the flawed approach of the past three years,” FDIC Acting Chairman Travis Hill said in a news release.

“I expect this to be one of several steps the FDIC will take to lay out a new approach for how banks can engage in crypto- and blockchain-related activities in accordance with safety and soundness standards.”

The FDIC says it expects to issue additional guidance to provide more clarity on “banks’ engagement in particular crypto-related activities” and will collaborate with the other banking agencies to provide further guidance or regulations that will replace current interagency documents that cover crypto assets.

Another banking agency, the Office of the Comptroller of the Currency (OCC), recently clarified certain crypto banking permissions  for national banks and federal savings associations.

“The OCC expects banks to have the same strong risk management controls in place to support novel bank activities as they do for traditional ones,” Acting Comptroller of the Currency Rodney E. Hood said in a news release at the time.

“Today’s action will reduce the burden on banks to engage in crypto-related activities and ensure that these bank activities are treated consistently by the OCC, regardless of the underlying technology.”