The Japanese cabinet has given its approval to a proposed amendment that seeks to categorize cryptocurrencies as financial products, signaling a significant adjustment in the nation's regulatory approach to the sector. The draft legislation would bring cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, the same regulatory framework that governs stocks and other securities, as reported by Nikkei. If the proposal is passed during the current parliamentary session, it could potentially come into effect as early as the fiscal year 2027.
Until now, 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 new rules would introduce a ban on insider trading and require issuers to publish disclosures on an annual basis. Moreover, the penalties for operating without registration would increase, with potential prison sentences of up to 10 years and fines of up to 10 million yen.
The Securities and Exchange Surveillance Commission would also be granted broader powers to monitor and regulate the market. According to Minister for Financial Services Satsuki Katayama, this move is intended to 'broaden the availability of capital for growth, in response to the evolving financial and capital markets, while ensuring fairness, transparency, and the protection of investors.'