The Japanese cabinet has approved a proposed amendment aimed at categorizing cryptocurrencies as financial products, signaling a significant shift in the nation's regulatory approach to the sector. By bringing cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, which currently governs stocks and other securities, the government seeks to introduce stricter oversight.
According to reports by Nikkei, if this proposal is passed during the current parliamentary session, it could come into effect as early as fiscal year 2027. Previously, cryptocurrencies in Japan were primarily regulated as payment tools under the Payment Services Act, focusing on aspects such as custody, anti-money laundering measures, and exchange registration. The new rules would not only ban insider trading but also require issuers to publish annual disclosures, thereby enhancing transparency.
Additionally, the penalties for operating without proper registration would increase substantially, with potential prison sentences of up to 10 years and fines of up to 10 million yen, significantly higher than the current three-year imprisonment and lower fines. The Securities and Exchange Surveillance Commission would be granted broader powers to monitor and regulate the market, ensuring fairness, transparency, and investor protection. In a press conference, the Minister for Financial Services, Satsuki Katayama, emphasized that this move is intended to 'increase the supply of growth capital in response to changes in financial and capital markets, ensuring market fairness, transparency, and the protection of investors.'