The Japanese government has given its approval to a legislative amendment that aims to categorize cryptocurrencies as financial products, marking a significant change in the country's regulatory approach to the sector. By bringing cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, which currently governs stocks and other securities, the proposed law seeks to introduce stricter oversight.
According to reports by Nikkei, if this amendment is passed during the current parliamentary session, it could come into effect by fiscal year 2027. Previously, Japan regulated cryptocurrencies primarily as a means of payment under the Payment Services Act, focusing on aspects such as custody, anti-money laundering measures, and exchange registration. The new rules would introduce a ban on insider trading and require issuers to publish annual financial disclosures.
Additionally, penalties for operating without proper registration would increase significantly, with potential prison sentences of up to 10 years and fines of up to 10 million yen, representing a substantial increase from the current three-year imprisonment and lower fines. The Securities and Exchange Surveillance Commission would also see its authority expanded to more effectively monitor and regulate the market.
Minister for Financial Services, Satsuki Katayama, emphasized during a press conference that this move is intended to 'enhance the availability of growth capital in response to evolving financial and capital markets, ensuring fairness, transparency, and investor protection.'