The Japanese cabinet has greenlit a proposed amendment that aims to categorize cryptocurrencies as financial products, signaling a significant change in the nation's regulatory approach to the sector. By bringing crypto assets under the purview of the Financial Instruments and Exchange Act, the same framework that governs stocks and other securities, the proposal marks a substantial shift from the current classification of crypto mainly as a payment tool under the Payment Services Act. This change, if enacted during the current parliamentary session, could come into effect as early as fiscal year 2027. The previous regulatory framework focused primarily on aspects such as custody, anti-money laundering checks, and exchange registration.
In contrast, the new rules would not only prohibit insider trading but also require issuers to publish annual disclosures, thereby enhancing transparency. Furthermore, penalties for operating without proper registration would increase significantly, 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 see its authority expanded to more effectively monitor the market.
According to Minister for Financial Services Satsuki Katayama, this move is intended to increase the availability of capital for growth, ensure fairness and transparency in the market, and protect investor interests, all in response to the evolving financial and capital markets landscape.