The Japanese cabinet has approved a proposed amendment that would categorize cryptocurrencies as financial assets, signifying a change in the country's approach to regulating this sector. By bringing cryptocurrency under the Financial Instruments and Exchange Act, which currently governs stocks and other securities, the proposal aims to provide a clearer framework for the industry. According to reports by Nikkei, if the law is passed during the current parliamentary session, it could come into effect as early as the 2027 fiscal year.
Previously, Japan has primarily viewed cryptocurrency through the lens of the Payment Services Act, focusing on aspects such as custody, anti-money laundering, and exchange registration. The new rules would introduce a ban on insider trading and require issuers to publish annual disclosures, enhancing transparency. Additionally, penalties for operating without 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 also see its authority expanded to better monitor and regulate the market. Minister for Financial Services Satsuki Katayama emphasized that this move is designed to increase the availability of capital for growth, ensuring fairness, transparency, and investor protection in response to the evolving financial and capital markets.