The Japanese government has given its approval to a proposed amendment that aims to categorize cryptocurrencies as financial products, signaling a significant change in the country's regulatory approach to the sector. By bringing crypto assets under the purview of the Financial Instruments and Exchange Act, which currently governs stocks and other securities, the new law could come into effect as early as the 2027 fiscal year if it passes during the current parliamentary session.
Previously, Japan had primarily viewed crypto as a means of payment, regulated under the Payment Services Act, with a focus on custody, anti-money laundering measures, and exchange registration. The updated rules would introduce a ban on insider trading and require issuers to publish annual disclosures, while also increasing penalties for operating without registration to a maximum of 10 years in prison and 10 million yen in fines, up from the current three years.
The Securities and Exchange Surveillance Commission would also see its authority expanded to better police the market. According to Minister for Financial Services Satsuki Katayama, this move is intended to 'broaden the availability of growth capital in response to shifts in the financial and capital markets, ensuring fairness, transparency, and investor protection'.