The Japanese cabinet has greenlit a legislative amendment aimed at categorizing cryptocurrencies as financial products, signaling a significant shift in the nation's regulatory approach towards the cryptocurrency 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 considerable departure from the current regulatory framework. According to Nikkei, if the amendment is passed during the current parliamentary session, it could come into effect as early as fiscal year 2027.
Previously, Japan regulated cryptocurrency primarily as a payment method under the Payment Services Act, focusing on aspects such as custody, anti-money laundering checks, and exchange registration. The new rules would not only ban insider trading but also require issuers to publish annual disclosures, thereby enhancing transparency. Furthermore, penalties for operating without registration would increase substantially, with potential prison sentences of up to 10 years and fines of up to 10 million yen, a significant escalation from the current three-year prison term. The Securities and Exchange Surveillance Commission would also see its authority expanded to more effectively monitor the market.
In a press conference, the Minister for Financial Services, Satsuki Katayama, underscored the move as a strategic step to 'increase the supply of growth capital in response to changes in financial and capital markets, ensuring fairness, transparency, and investor protection.'