Japan's cabinet has endorsed a proposed amendment that aims to categorize cryptocurrencies as financial products, marking a significant shift in the country's regulatory approach to the cryptocurrency sector. The proposed legislation would bring cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, a regulatory framework currently applied to stocks and other securities, as reported by Nikkei. If the law is passed during the current parliamentary session, it could come into effect as early as the 2027 fiscal year.
Previously, Japan has primarily viewed cryptocurrency as a means of payment under the Payment Services Act, focusing on aspects such as custody, anti-money laundering checks, and exchange registration. The new regulations would introduce a ban on insider trading and require issuers to publish annual disclosures. Additionally, penalties for operating without 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 be granted broader powers to oversee the market. According to Minister for Financial Services Satsuki Katayama, 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 investor protection.'