The Japanese cabinet has greenlit a draft amendment aimed at categorizing cryptocurrencies as financial products, signaling a significant regulatory shift in the country's approach to the sector. By bringing crypto assets under the Financial Instruments and Exchange Act, the same framework that governs stocks and other securities, the proposal aligns with the regulations applied to traditional financial instruments, as reported by Nikkei. If approved during the current parliamentary session, the new law could come into effect as early as fiscal year 2027. Previously, Japan regulated crypto 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 not only ban insider trading but also require issuers to publish annual disclosures, thereby enhancing transparency. Furthermore, penalties for operating without proper registration would increase, with potential prison sentences of up to 10 years and fines of up to 10 million yen, a significant rise from the current three-year imprisonment and lower fines. The Securities and Exchange Surveillance Commission would be granted expanded powers to oversee the market, ensuring stricter enforcement. According to Minister for Financial Services Satsuki Katayama, this move is intended to 'broaden the supply of growth capital in response to evolving financial and capital markets, ensuring fairness, transparency, and investor protection.'