Japan's government has endorsed a legislative amendment aimed at categorizing cryptocurrencies as financial products, signaling a significant change in the country's regulatory approach to the sector. The proposed legislation would bring cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, the same framework that governs stocks and other securities, as reported by Nikkei. If approved during the current parliamentary session, the new law 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 measures, and exchange registration.
The revised rules would outlaw insider trading and obligate issuers to release annual financial disclosures. Additionally, 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, representing a significant escalation from the current three-year imprisonment term.
The Securities and Exchange Surveillance Commission would also see its authority expanded to more effectively monitor the market. According to Minister for Financial Services Satsuki Katayama, this move is designed to 'increase the availability of capital for growth in response to evolving financial and capital markets, ensuring fairness, transparency, and investor protection.'