The Japanese government has approved a proposed amendment to classify digital currencies as financial products, signaling a significant change in the country's regulatory approach to the sector. By bringing cryptocurrencies under the Financial Instruments and Exchange Act, the same framework that governs stocks and other securities, Japan aims to enhance oversight.
This shift could become law as early as 2027 if approved in the current parliamentary session. Previously, cryptocurrencies were primarily viewed as payment methods under the Payment Services Act, with a focus on custody, anti-money laundering measures, and exchange registration. The new rules would prohibit insider trading, require issuers to disclose information annually, and increase penalties for operating without registration to up to 10 years in prison and fines of 10 million yen.
The Securities and Exchange Surveillance Commission would also receive broader powers to monitor 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 fairness, transparency, and investor protection.'