The Financial Services Agency (FSA) in Japan is planning to recognize encryption assets as financial products equivalent to securities.
In this way, it was reported that the agency started discussions within a closed study group that includes experts to assess the current organizational framework that governs encryption assets.
FSA encryption repair
According to a report By “The Nikkei” on February 10, FSA intends to determine the direction of the system’s potential reforms based on the results of the study group by the end of June, after which it will seek to obtain opinions from the Financial System Council, is scheduled to be held in the fall. After these discussions, the agency aims to formulate and submit a bill to amend relevant laws during the 2026 regular diet session.
If regulatory changes lead to the classification of encryption assets legally on an equal basis with securities, the approval of the exchange funds circulating in the encrypted assets (ETFS) in Japan may be a possibility. However, details of the new frame remain in discussion.
The main focus includes whether the encryption assets should be combined within the framework of the current securities shown in the Financial Tools and Exchange Law, or to provide a new regulatory framework within the same law, or to be addressed under the payment services law.
In addition, deliberations will determine the scope of regulating encryption assets, including whether only restrictions should apply to the main cryptocurrencies.
The debate about the classification of encryption assets was continuing. In August last year, the FSA Hideki ITO Commissioner said that the approval of the traded investment funds related to encrypted currencies require careful study. A few months later, Prime Minister Shigro Eshiba adopted a cautious position and wondered whether the cryptocurrency should be reached for public investment.
During the same period, it prompted the local cryptocurrency industry for organizational clarity. In October, the local ETF Cryptocurrency Distinguished Study Group, for example, published a set of recommendations that defend the creation of investment funds circulating in the encrypted currency in Japan.
Their proposals have sought to give priority to major encrypted currencies such as Bitcoin and Ethereum, which enhances the development of the necessary organizational frameworks and the implementation of a separate tax structure for investment funds circulating in the encrypted currency and topical transactions.
Frequency in Bitcoin reserves in Japan
Despite the latest news, Japan is still skeptical of bitcoin adopting as part of its national reserves, noting concerns about security, liquidity and volatility. Prime Minister Ishiba recently stated that the country lacks sufficient information about international strategies, especially from the United States, which makes it difficult to take a final position.
While the global interest in bitcoin reserves is escalating, the Japanese government insists that its foreign exchange reserves give priority to stability. Meanwhile, the government investment fund for pensions Bitcoin is explored for diversification.
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