The Japanese cabinet has endorsed a proposed amendment aimed at categorizing cryptocurrencies as financial products, signaling a significant shift in the nation's regulatory approach to the cryptocurrency sector. This proposal 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 this legislation is passed during the current parliamentary session, it could come into effect as early as the fiscal year 2027.
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 new regulations would not only ban insider trading but also require issuers to publish annual disclosures, thereby enhancing transparency. Moreover, penalties for operating without proper 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 be granted broader powers to oversee and regulate the market. According to Minister for Financial Services Satsuki Katayama, this move is intended to 'increase the supply of growth capital in response to changes in financial and capital markets, ensuring fairness, transparency, and investor protection in the market.'