The Japanese government has approved a legislative amendment 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 aligns cryptocurrency regulation more closely with that of traditional financial instruments. If enacted during the current legislative session, the new law could come into effect as early as the 2027 fiscal year. Previously, cryptocurrencies in Japan were primarily regulated as payment tools under the Payment Services Act, with a focus on aspects such as custody, anti-money laundering, and exchange registration.
The revised rules would prohibit insider trading and mandate that issuers publish annual financial disclosures. Additionally, 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, representing a significant escalation from current penalties. The Securities and Exchange Surveillance Commission would also see its authority expanded to more effectively oversee the market. According to Minister for Financial Services Satsuki Katayama, this regulatory shift is intended to 'increase the availability of capital for growth, ensuring fairness, transparency, and investor protection in response to evolving financial and capital markets.'