The Japanese government has adopted a proposed legislative amendment aimed at categorizing cryptocurrencies as financial products, signaling a significant shift in the nation's regulatory approach to the cryptocurrency sector. By bringing cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, which currently governs stocks and other securities, the proposed legislation aligns crypto regulation more closely with that of traditional financial instruments, as reported by Nikkei.
If enacted 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 extend beyond these areas, explicitly banning insider trading and requiring issuers to make annual disclosures. The proposed regulations also significantly increase penalties for non-compliance.
Operating a cryptocurrency business without proper registration could result in prison sentences of up to 10 years, a substantial increase from the current three-year maximum, and fines could reach as high as 10 million yen. Furthermore, the Securities and Exchange Surveillance Commission would be granted broader powers to monitor and regulate the market.
According to Minister for Financial Services Satsuki Katayama, this regulatory adjustment is intended to 'broaden the availability of capital for growth, responding to evolving financial and capital markets, while ensuring fairness, transparency, and the protection of investors.'