The Japanese government has greenlit a proposed amendment aimed at reclassifying cryptocurrencies as financial products, signaling a significant regulatory shift. By bringing crypto assets under the Financial Instruments and Exchange Act, the same framework that governs stocks and other securities, Japan is poised to alter its approach to the crypto sector.
This change could become effective as early as 2027 if approved in the current parliamentary session. Previously, cryptocurrencies were primarily viewed as payment tools, regulated under the Payment Services Act with a focus on aspects like custody and anti-money laundering. The new rules would not only ban insider trading but also require issuers to disclose information annually.
Additionally, penalties for operating without proper registration would increase substantially, 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 better monitor and regulate the market. According to Minister for Financial Services Satsuki Katayama, this move is intended to enhance market fairness, transparency, and investor protection, while also responding to the evolving financial and capital markets landscape.