The Japanese government has greenlit a legislative amendment that aims to categorize cryptocurrencies as financial products, signaling a significant change in the country's regulatory approach. By bringing crypto assets under the purview of the Financial Instruments and Exchange Act, the same framework that governs stocks and other securities, the proposal marks a departure from the current treatment of crypto primarily as a payment method under the Payment Services Act.
The revised rules, which could come into effect as early as fiscal 2027 if approved in the current parliamentary session, would introduce a ban on insider trading and require issuers to release annual financial disclosures. Furthermore, penalties for operating without proper registration would increase substantially, with potential prison sentences of up to 10 years and fines of up to 10 million yen, a significant escalation 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 crypto market. According to Minister for Financial Services Satsuki Katayama, this move is designed to enhance market transparency, fairness, and investor protection, while also responding to the evolving financial and capital markets by increasing the availability of growth capital.