The Japanese cabinet has approved a proposed amendment that seeks to categorize cryptocurrencies as financial products, marking a significant shift in the country's regulatory approach to the cryptocurrency sector. This move would bring cryptocurrencies under the purview of the Financial Instruments and Exchange Act, the same regulatory framework that governs stocks and other securities, as reported by Nikkei. If this proposal is passed during the current parliamentary session, it could come into effect as early as the fiscal year 2027.
Previously, Japan has primarily viewed cryptocurrency through the lens of the Payment Services Act, focusing on aspects such as custody, anti-money laundering measures, and exchange registration. The new rules would introduce a ban on insider trading and require issuers to disclose information annually. Additionally, the penalties for operating without proper registration would increase significantly, with potential prison sentences of up to 10 years, a substantial increase from the current three years, and fines could reach up to 10 million yen.
The Securities and Exchange Surveillance Commission would also be granted broader powers to monitor and regulate the market. According to Minister for Financial Services Satsuki Katayama, this regulatory adjustment aims to 'enhance the availability of growth capital in response to the evolving financial and capital markets, ensuring fairness, transparency, and the protection of investors.'