Japan could soon treat cryptocurrencies like stocks and other financial investments, rather than just as a payment method.

The country’s House of Representatives passed a bill that shifts crypto regulation from the Payment Services Act to the Financial Instruments and Exchange Act.

The Financial Services Agency (FSA) attributed the move to crypto quickly becoming a more mainstream investment asset in an announcement of the passage of the bill Thursday. Japan now has more than 14 million open crypto accounts, according to data cited by the FSA. Low- to middle-income everyday retail users are driving this growth, with people earning under 7 million yen ($43,600) a year accounting for roughly 70% of those accounts.

The new rules, expected to take effect next year, would classify crypto assets as financial instruments,subjecting them to lower taxes and stricter trading rules. It also opens the door to new products like exchange-traded funds (ETFs). “Crypto-ETFs would provide investors with easy-to-understand ways of investment,” the ruling Liberal Democratic Party said recently.

“Our framework intends to improve user protection while remaining mindful of promoting innovation, given that crypto assets are increasingly positioned as investment targets for both domestic and foreign investors,” the FSA said in the statement.

The FSA said the government is implementing an insider trading ban for crypto that works exactly like the stock market. Company insiders or exchange workers are banned from buying or selling tokens if they know about unpublicized “material facts”. This includes secrets like an exchange planning to add or drop a coin, a company going out of business, or large trades that make up.

The bill creates strict “information public disclosure rules” to stop developers from lying to the public. Projects must post clear details on how their technology works, their supply, and their business finances. If a company raises capital through a token but chooses not to obtain an independent audit from an accounting firm, regular investors will face a strict investment cap of 2 million yen.

The government also is getting much tougher on bad actors. The maximum prison sentence for anyone running an unregistered crypto business will jump from three years to 10 years. The country’s securities watchdog will also get clear powers to conduct criminal investigations and ask courts to freeze funds. Operating without registration could bring up to 10 years in prison, up from three, and fines could increase to 10 million yen ($62,800).

A Canadian teen stole more than $13 million in crypto through social engineering scams to pay for an “exotic lifestyle” in Miami and Los Angeles, including buying luxury cars, jewelry and taking private jet trips, US prosecutors say.

In May, US prosecutors charged then-19-year-old Trenton Richard Johnston for a scheme in which he and co-conspirators impersonated Google, Trezor and other crypto firm employees to gain access to victims’ crypto.

On Tuesday, Johnston, now 20, pleaded guilty to conspiracy to commit money laundering, avoiding further charges that could have resulted in a maximum sentence of up to 40 years in prison. 

Trenton Richard Johnston’s mugshot. Source: Miami-Dade County

Social engineering attacks, where scammers portray themselves as trusted entities or people to trick victims, have become widespread in crypto, as artificial intelligence tools have boosted the capabilities of attackers to impersonate others.

“This case shows that some of the biggest crypto thefts today are not driven by sophisticated code exploits, but by basic human manipulation,” Cyvers CEO and co-founder Deddy Lavid told Cointelegraph. 

“Crypto makes this especially dangerous because transactions are fast and largely irreversible,” he added. 

“The attacker only needs to win the victim’s trust once, for a few minutes, and the loss can be permanent.”

According to court documents, Johnston and his co-conspirators started their crypto scam efforts around January 2024. In February, Johnston tricked a victim into believing that his Google email and Coinbase accounts were compromised, allowing them to steal approximately $41,000 in Ether (ETH). 

Less than a month later, Johnston and his co-conspirators posed as Google and Trezor representatives to trick another victim in California into believing that someone was attempting to access their cryptocurrency wallet, allowing them to drain the account of about $13 million in Bitcoin (BTC). 

Related: Coinbase freezes $3M tied to Southeast Asia crypto fraud networks

About $1.2 million of the stolen crypto was used to fund a lavish lifestyle across Miami and Los Angeles in just two months, according to prosecutors.

With the help of exotic car-rental company owner Brandon Tardibone, who also pleaded guilty to money laundering, Johnston spent most of the money on buying and renting luxury cars, including two BMWs and a Lamborghini Aventador SVJ. 

A picture of a Lamborghini Aventador SVJ,  a luxury car prosecutors say Trenton Johnston used stolen money to rent. Source: Wikimedia Commons

Stolen funds were also used to rent a private jet, a rental house in North Miami and plane tickets for “two girls from New York.”

Johnston’s run ended in March, when he was pulled over for speeding in a Rolls-Royce and found to be carrying 21 suspected amphetamine tablets. Investigators seized his computer, cellphone and handwritten notes, uncovering his link to the fraud scheme. 

He has since turned over approximately 53.16 Bitcoin and 275.23 Ether, worth $3.7 million at current prices. In light of the plea deal and in return for full cooperation, prosecutors have recommended a sentence of 51 to 63 months in prison for Johnston, along with dismissal of the wire fraud charges. 

Prosecutors also recommended Tardibone serve a sentence of between 27 and 33 months in prison.

US crackdown on crypto scams

The latest case is another win for US authorities tracking high-profile crypto scammers. 

In April, a Californian resident was sentenced to 70 months in prison for his part in a criminal enterprise that stole $263 million in cryptocurrency through social engineering and burglary. Evan Tangeman, 22, pleaded guilty in December for helping the criminal organization launder at least $3.5 million in illicit funds. 

In February, a Chinese national was sentenced to 20 years in US federal prison for a global cryptocurrency scam that stole more than $73 million from victims, many of them American investors. 

“The industry cannot rely on education alone,” Leddy said. 

“Wallets, exchanges, custodians, and banks need real-time, pre-transaction security controls that detect suspicious behavior, risky destination wallets, and laundering patterns before funds leave the account. The key shift is from investigating fraud after the theft to preventing it before execution,” he added.

Magazine: Does ‘Paper Bitcoin’ mean there’s an unlimited supply of BTC?

Key Highlights

• Japan reclassifies Bitcoin and Ether under securities regulations similar to traditional stocks.

• Tax reform could slash crypto capital gains rates from 55% to a flat 20%.

• Regulatory pathway opens for Bitcoin and Ether exchange-traded funds in Japanese markets.

• Enhanced insider trading enforcement may consolidate the exchange landscape.

• Stablecoins remain governed by payment service regulations outside this framework.

Japanese legislators have taken a decisive step toward integrating digital currencies into the country’s established financial system. A comprehensive bill advancing through parliament would reclassify cryptocurrency assets as securities, implementing tax reductions, strengthening market supervision, and establishing infrastructure for regulated investment vehicles. The framework provides financial institutions, trading platforms, and market participants with unprecedented regulatory clarity.

Legislative Progress Signals Regulatory Evolution

The lower chamber of Japan’s parliament passed the legislation on Thursday, advancing it to the upper chamber for concluding deliberations. Political observers anticipate the regulatory structure will become operational next year following final parliamentary approval. The legislation modifies the Financial Instruments and Exchange Act, effectively incorporating cryptocurrencies into conventional financial oversight.

According to the legislative proposal, Japan would reclassify cryptocurrency holdings as financial instruments instead of maintaining their current designation as payment-related assets. This transformation would align trading behavior, transparency requirements, and regulatory monitoring with equity market protocols. Regulators would gain enhanced authority to combat insider trading schemes and market manipulation tactics.

This legislative push represents the culmination of extensive policy discussions triggered by exchange collapses and inconsistent taxation policies. Japan established one of the world’s first comprehensive crypto licensing frameworks following significant market disruptions. Current officials seek refined regulations as interest intensifies across institutional and consumer sectors.

Bitcoin Reclassification Creates Investment Product Opportunities

Bitcoin would receive designation as a financial instrument within the proposed regulatory architecture. Consequently, trading platforms and fund managers would obtain legal authorization for cryptocurrency-linked investment vehicles. This modification could facilitate domestic Bitcoin ETFs on authorized securities exchanges.

Japan Exchange Group anticipates cryptocurrency-tracking ETF products could debut as early as next year. These offerings would provide investors with Bitcoin market exposure through standard brokerage infrastructure and regulated exchange mechanisms. This framework might diminish dependency on publicly-traded corporations holding substantial cryptocurrency reserves.

Metaplanet has captured investor attention through its holdings exceeding 40,000 Bitcoin. Nevertheless, ETF availability could generate direct market rivalry for corporate treasury-focused digital asset strategies. This evolution may compel publicly-listed entities to demonstrate strategic rationale, custody arrangements, and financial statement valuations with greater transparency.

Ether Inclusion and Tax Rate Transformation

Ether would receive identical treatment as Bitcoin within the proposed securities classification system. The accompanying tax modification would transition cryptocurrency profits toward a uniform 20% assessment. Japan’s existing framework subjects certain cryptocurrency gains to marginal rates approaching 55%.

This taxation adjustment could commence in 2028, while broader regulatory provisions may activate sooner. The reduced assessment would harmonize cryptocurrency treatment with equities and fixed-income securities. The change could eliminate obstacles for frequent traders and buy-and-hold investors alike.

Stablecoins will continue operating beyond this legislation’s scope, maintaining their status under payment service frameworks. Japan authorized its inaugural yen-denominated stablecoin, JPYC, during autumn 2025. The nation additionally witnessed major banking institutions launching collaborative stablecoin initiatives with official regulatory endorsement.

Enhanced Enforcement Could Transform Exchange Ecosystem

The proposed legislation substantially increases compliance demands throughout Japan’s cryptocurrency sector. Unauthorized cryptocurrency operators could receive prison sentences extending to 10 years. Existing statutes limit maximum incarceration to three years.

Japan intends to implement sanctions for cryptocurrency insider trading equivalent to public securities violations. These provisions could strengthen confidence in authorized platforms while eliminating regulatory inconsistencies. However, they might simultaneously escalate legal and auditing expenses for resource-constrained operators.

Japan maintained 27 licensed cryptocurrency exchange operators as of April 1. Established platforms may absorb new transparency and compliance obligations more efficiently. Smaller exchanges might encounter consolidation pressure, market exits, or requirements for substantial internal control enhancements.

Binance’s plan to reenter the Philippines through local partner BlockShoals Technologies has faced a new regulatory hurdle after the country’s central bank said both firms lack required licenses.

According to BitPinas, Bangko Sentral ng Pilipinas said neither Binance nor BlockShoals currently holds a virtual asset service provider license. The license is needed to operate crypto payment and transaction services in the country.

BSP says Binance and BlockShoals lack licenses

The BSP clarified that the two firms do not hold the central bank approval required for VASP activity. That means they cannot operate as licensed virtual asset service providers under the current framework.

The statement adds a new layer to Binance’s attempted comeback in the Philippines. Binance had earlier said it was working with BlockShoals under the Philippine Securities and Exchange Commission’s StratBox sandbox.

BlockShoals received SEC clearance under the sandbox structure. However, the BSP said sandbox participation does not remove the need for a separate central bank license.

That distinction matters because the SEC and BSP oversee different parts of the market. A sandbox test may support innovation, but a VASP license remains needed for certain crypto services.

SEC sandbox approval is not enough

The SEC’s StratBox framework allows selected firms to test financial products in a supervised setting. Binance and BlockShoals planned to use that route to test a local platform experience.

The SEC previously said BlockShoals would serve as the local intermediary, while Binance would provide technology, product support, security and compliance experience.

BitPinas reported that the revised sandbox terms require BlockShoals to integrate its systems with a licensed domestic VASP within 90 days. User onboarding through Binance infrastructure cannot begin before that step.

The SEC also revised its wording around Binance. The report said the regulator described Binance as a global crypto-asset service provider rather than a global VASP.

Binance remains blocked in the Philippines

Binance has a long regulatory history in the Philippines. In 2023, the SEC said the exchange operated without proper registration and licensing.

Philippine authorities later moved to restrict access. The National Telecommunications Commission blocked Binance’s website in 2024 after the SEC requested action.

As previously reported by crypto.news, the Binance app was also removed from the Philippine Google Play Store in early 2026. Users searching for Binance were redirected to other regional exchange apps.

Separate reporting said Binance partnered with BlockShoals in May as it sought a regulated path back into the market. The new BSP statement shows that route still depends on licensing compliance.

Reentry now depends on licensed local rails

The latest update does not close the door on Binance’s return. It shows that the exchange and its partner must meet both SEC and BSP requirements before operating locally.

For BlockShoals, the next key step is its required link with a licensed domestic VASP. That integration must happen before any Binance-backed onboarding can begin.

The case also shows how the Philippines is separating sandbox testing from full market access. Regulators appear open to supervised trials, but they continue to require licensing for live crypto services.

For Binance, the message is clear. Its Philippine comeback will not depend on a sandbox approval alone. It must move through licensed local rails before users can access services tied to its infrastructure.

Binance is trying to enter the Philippines market through a local partner. Regulators are making clear it won’t be simple.

The country’s central bank said neither the world’s largest crypto exchange nor its local partner, BlockShoals Technologies Inc., holds the necessary license to operate as a virtual asset service provider (VASP) in the country, BitPinas media reported.

The license, issued by Bangko Sentral ng Pilipinas, is essential to facilitate crypto payment and transaction rails and is separate from any approval granted by the country’s Securities and Exchange Commission (SEC).

CoinDesk reached out to Binance for a comment.

Binance has previously been active in the country. But in 2023, the SEC noted it was operating without a license. It ordered internet service providers and app stores to block the exchange the following year.

Last month, Binance said it is working with BlockShoals, a local fintech company that received initial SEC clearance in November under the regulator’s sandbox framework. The sandbox, called StratBox (Strategic Sandbox), is a controlled, supervised environment for fintech and crypto firms to test financial services.

According to BitPinas, the central bank has explicitly stated that participation in the sandbox doesn’t substitute for central bank licensing, and entities seeking to operate in the country must comply with both frameworks independently.

The report also says the SEC revised its language in the sandbox deal, describing Binance as a global crypto-asset service provider rather than a global VASP, a narrower designation. The revised terms also require BlockShoals to integrate its systems with a licensed domestic VASP within 90 days before any user onboarding through Binance infrastructure can begin.

Binance is back at the door. Whether it gets in, and on whose terms, remains to be seen.