The Japanese cabinet has approved a bill that would categorize cryptocurrencies as financial products, signaling a significant change in the country's regulatory approach to the sector. By bringing crypto assets under the Financial Instruments and Exchange Act, the same framework that governs stocks and other securities, the proposal aims to enhance oversight. This shift could become law as early as fiscal 2027 if approved during the current parliamentary session. Previously, Japan regulated crypto primarily as a payment method under the Payment Services Act, focusing on aspects like custody and exchange registration.
The proposed regulations would not only ban insider trading but also require issuers to publish annual reports. Furthermore, penalties for operating without proper registration would increase, with potential prison sentences of up to 10 years and fines of up to 10 million yen.
The Securities and Exchange Surveillance Commission would also be granted more authority to monitor the market. According to Minister for Financial Services Satsuki Katayama, this move is intended to increase the availability of growth capital, ensure market fairness and transparency, and protect investors in response to evolving financial and capital markets.