Ripple has achieved significant regulatory milestones in Europe while Japan prepares a groundbreaking reclassification of XRP, marking a pivotal moment for institutional cryptocurrency adoption. In January 2026, Ripple secured approvals from two key European regulators: the UK Financial Conduct Authority (FCA) on January 9 and Luxembourg's CSSF on January 14. These approvals expand Ripple's regulated European footprint and bring its global license count to 75.
The European regulatory progress has been accompanied by substantial growth in banking integrations and custody services. Ripple renewed a custody partnership in Turkey, where the country's second-largest private bank partnered on institutional-grade custody technology supporting XRP, Bitcoin (BTC), and Ethereum (ETH). User growth has been explosive, expanding from 14,000 in late 2024 to over one million users, with Jungle Inc describing these developments as live banking integrations rather than pilot programs.
Simultaneously, Japan's Financial Services Agency (FSA) is preparing a tectonic regulatory shift for XRP. Following reports on January 25, 2026, the FSA plans to officially reclassify Ripple's XRP as a "regulated financial product" by the second quarter of 2026. This move will transition XRP out of the broader "crypto asset" category defined by the Payment Services Act and into the more rigorous framework of the Financial Instruments and Exchange Act (FIEA).
The Japanese reclassification represents a strategic alignment with XRP's existing institutional footprint, where it has become a foundational pillar of the national banking and remittance infrastructure. By bringing XRP under the FIEA, Japan is effectively granting it the same "investment-grade" status as traditional stocks and bonds. This development is expected to unlock unprecedented levels of institutional capital and provide a blueprint for other major digital assets.
A core objective of Japan's reclassification is enhanced investor protection. The new FIEA-based rules will require exchanges and liquidity providers to provide comprehensive disclosures regarding XRP's volatility profile, technical characteristics, and issuer relationships. Crucially, the move introduces a formal ban on insider trading and market manipulation for XRP, addressing long-standing concerns about digital asset pricing integrity.
The regulatory upgrade is linked to Japan's broader "FY2026 Tax Blueprint," which proposes a flat 20% capital gains tax on all digital assets classified as financial products. This represents a massive reduction from the previous "miscellaneous income" bracket where rates could reach 55%, aligning crypto taxation with traditional stock market investments.
Beyond taxation, the reclassification supports Japan's initiative to build a "tokenized economy" on the XRP Ledger, which is already utilized by a consortium of major banks for instant cross-border settlements. The FSA is coordinating with Ripple and local exchanges to create a hybrid system pairing blockchain speed with sovereign legal stability.
The developments occur against a backdrop of global financial stress, with Japan's government bond yields spiking, gold trading near record highs around $5,000 per ounce, and U.S. government shutdown risks resurfacing. Ripple CEO Brad Garlinghouse told CNBC he expects crypto markets to reach all-time highs, citing regulatory momentum and market structure changes.
