PANews reported on January 27th that, according to Finance Feeds, Japan's Financial Services Agency (FSA) plans to formally reclassify Ripple's XRP as a "regulated financial product" by the second quarter of 2026. This would remove it from the "crypto asset" category under the Payment Services Act and place it under the stricter regulatory framework of the Financial Instruments and Exchanges Act. This move aims to align XRP's legal status with its widespread institutional adoption in Japan, where it has become a pillar of the country's banking and remittance infrastructure.

Following its reclassification, XRP will acquire "investment-grade" status, equivalent to traditional stocks and bonds, which is expected to attract more institutional capital and provide a regulatory model for other major digital assets. The new rules will require exchanges and liquidity providers to make full disclosures regarding asset volatility, technical characteristics, and issuer relationships, and will explicitly prohibit insider trading and market manipulation to enhance investor protection.