Japan Has Not Classified XRP as Financial Instrument

TLDR

• Crypto Eri stated that Japan has not classified XRP as a financial instrument.
• Japan currently regulates XRP and other crypto assets under the Payment Services Act.
• The Financial Services Agency has proposed reforms that could reclassify crypto assets by 2027.
• The proposed framework would introduce stricter disclosure rules and penalties for violations.
• Japan now has more than 13 million crypto accounts, reflecting steady market growth.

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Claims that Japan has already classified XRP as a financial instrument have surfaced online this week. However, XRP community figure Crypto Eri rejected those statements and called them inaccurate. She said financial influencers have spread incorrect information about XRP’s current legal status in Japan.

Crypto Eri addressed the issue on social media and pushed back against what she described as growing misinformation. She stated that regulators in Japan have not classified XRP as a financial instrument. Her comments followed reports discussing possible regulatory reforms from Japan’s Financial Services Agency.

XRP Remains Outside Japan’s Financial Instruments Classification

Crypto Eri said, “XRP is not yet classified as a financial instrument in Japan.” She explained that current laws do not place XRP or other crypto assets under the Financial Instruments and Exchange Act. Instead, Japan regulates cryptocurrencies under the Payment Services Act.

However, Japan’s Financial Services Agency has proposed changes to existing rules. The agency plans to amend regulations and shift crypto assets under the Financial Instruments and Exchange Act by 2027. If lawmakers approve the proposal, authorities will introduce stricter disclosure rules and penalties.

Japan’s crypto market continues to expand, and regulators have responded to rising adoption rates. The country now reports more than 13 million crypto accounts, which equals about 10% of the population. At the same time, authorities handle hundreds of fraud-related complaints each month.

Reports from Nikkei state that the proposed framework would allow banks to hold crypto assets for investment purposes. This change would integrate digital assets into traditional finance structures. Meanwhile, NFTs and stablecoins would remain under the current regulatory framework.

U.S. SEC Classifies XRP as a Digital Commodity

While Japan reviews potential reforms, U.S. regulators have clarified XRP’s classification. The U.S. Securities and Exchange Commission has classified XRP as a digital commodity, not a security. The agency has also applied the same classification to Bitcoin, Ethereum, and Solana.

The SEC stated that these assets derive value from their role in functional networks. The agency said they do not depend on a central entity for profit generation. As a result, the SEC signaled that most crypto assets do not meet securities definitions.

The agency also clarified its stance on staking and mining activities. It said these activities generally do not qualify as securities transactions. This approach reflects a move away from relying solely on the Howey Test.

Legal expert Bill Morgan addressed the broader classification debate. He warned that applying a securities framework to XRP could affect its utility. He argued that heavier regulation could impact its function as a bridge currency for cross-border payments.

Morgan also said definitions of “financial product” differ across jurisdictions. He pointed out that Australia focuses on regulating intermediaries instead of classifying assets directly. Meanwhile, Japan’s proposed reforms remain under review and would take effect around 2027 if approved.

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