The Japanese cabinet has endorsed a proposed amendment to categorize cryptocurrencies as financial products, signaling a significant change in the country'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, the new rules aim to enhance regulatory oversight. If approved during the current parliamentary session, the legislation could come into effect as early as the 2027 fiscal year. Previously, Japan regulated crypto primarily as a payment method under the Payment Services Act, focusing on aspects such as custody, anti-money laundering, and exchange registration.
The revised regulations would prohibit insider trading, require issuers to disclose information annually, and increase penalties for operating without registration to a maximum of 10 years in prison and 10 million yen in fines. The Securities and Exchange Surveillance Commission would be granted broader powers to monitor 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'.