Japan's cabinet has endorsed a legislative amendment aimed at categorizing cryptocurrencies as financial products, signaling a significant regulatory shift. The proposed law would bring cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, a regulatory framework currently applied to stocks and other securities. If approved during the current parliamentary session, the legislation could come into effect by fiscal year 2027.
Previously, Japan had primarily treated cryptocurrency as a payment method 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 disclosures. Additionally, 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 oversee the market. According to Minister for Financial Services Satsuki Katayama, this move is intended to 'increase the availability of growth capital in response to changes in financial and capital markets, ensuring fairness, transparency, and investor protection.'