The Japanese cabinet has endorsed a draft amendment that classifies cryptocurrencies as financial products, signaling a significant shift 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 governing stocks and other securities, the proposal aims to enhance regulatory oversight. According to Nikkei, if the law is passed during the current parliamentary session, it could come into effect as early as fiscal year 2027. Previously, Japan regulated crypto primarily as a payment tool under the Payment Services Act, focusing on aspects such as custody, anti-money laundering, and exchange registration.
The new regulations would prohibit insider trading and require issuers to publish annual disclosures, significantly 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 notable escalation from the current three-year imprisonment and lower fines. The Securities and Exchange Surveillance Commission would also see its authority expanded to more effectively police the market.
In a press conference, the Minister for Financial Services, Satsuki Katayama, emphasized that these changes are designed to 'expand the supply of growth capital in response to changes in the financial and capital markets, ensuring market fairness, transparency, and the protection of investors.'