The Japanese government has approved a legislative amendment aimed at categorizing cryptocurrencies as financial products, signaling a significant change in the nation's regulatory approach to the sector. By bringing cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, which currently governs stocks and other securities, Japan is poised to align its crypto regulations more closely with those of traditional financial instruments.
This shift could become effective as early as 2027 if the proposal is passed during the current parliamentary session. Previously, cryptocurrencies were primarily viewed as payment tools, regulated under the Payment Services Act with a focus on custody, anti-money laundering, and exchange registration. The proposed rules introduce stricter oversight, including the prohibition of insider trading and the requirement for issuers to publish annual reports. Penalties for operating without registration would increase substantially, with potential prison sentences of up to 10 years and fines of up to 10 million yen, representing a significant escalation from the current three-year imprisonment and lower fines.
Minister for Financial Services Satsuki Katayama emphasized that these changes aim to enhance market fairness, transparency, and investor protection, while also expanding access to growth capital in response to evolving financial and capital markets.