The Japanese government has approved a draft bill that seeks to categorize cryptocurrencies as financial products, signaling a significant shift in the country's regulatory approach to the sector. By bringing crypto assets under the purview of the Financial Instruments and Exchange Act, the same framework that governs stocks and other securities, Japan is poised to introduce more stringent oversight.
This change, reported by Nikkei, could come into effect as early as fiscal 2027 if the legislation passes during the current parliamentary session. Previously, cryptocurrencies were primarily viewed as payment tools, regulated under the Payment Services Act, with a focus on custody, anti-money laundering measures, and exchange registration. The proposed regulations will introduce a ban on insider trading and require issuers to release annual financial disclosures. Furthermore, penalties for operating without proper registration will increase, with potential prison sentences of up to 10 years and fines of up to 10 million yen.
The Securities and Exchange Surveillance Commission will also see its authority expanded to more effectively monitor and regulate the market. According to Minister for Financial Services Satsuki Katayama, these changes are designed to 'enhance the availability of growth capital in response to evolving financial and capital markets, ensuring fairness, transparency, and investor protection.'