Japan's cabinet has greenlit a legislative amendment aimed at categorizing cryptocurrencies as financial products, signaling a significant regulatory shift. The proposed change would bring cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, the same framework governing stocks and other securities, as reported by Nikkei.
If approved during the current parliamentary session, the legislation could come into effect as early as fiscal year 2027. Previously, Japan treated cryptocurrency primarily as a payment method under the Payment Services Act, focusing on aspects such as custody, anti-money laundering measures, and exchange registration. The revised rules would outlaw insider trading and compel issuers to release annual disclosures.
Penalties for non-compliance would increase, with unregistered operations potentially resulting in prison sentences of up to 10 years and fines of up to 10 million yen, a significant rise from the current three-year sentence. The Securities and Exchange Surveillance Commission would also see its authority expanded to better monitor the market. According to Minister for Financial Services Satsuki Katayama, this move is intended to 'broaden the availability of growth capital in response to evolving financial and capital markets, ensuring fairness, transparency, and investor protection.'