The Japanese government has approved a draft bill that classifies cryptocurrencies as financial products, signaling a significant change in the country's regulatory approach to the industry. By bringing cryptocurrency assets under the Financial Instruments and Exchange Act, which currently governs stocks and other securities, the proposed legislation aims to enhance regulatory oversight. If the bill is passed during the current parliamentary session, it could come into effect as early as fiscal year 2027.
Previously, Japan regulated cryptocurrencies primarily as a means of payment under the Payment Services Act, focusing on aspects such as custody, anti-money laundering, and exchange registration. The proposed rules introduce a ban on insider trading and require issuers to publish annual reports. 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, a significant rise from the current three-year imprisonment and lower fines. The Securities and Exchange Surveillance Commission would also gain expanded powers to monitor and regulate the market.
According to Minister for Financial Services Satsuki Katayama, this regulatory shift is intended to 'increase the availability of growth capital in response to evolving financial and capital markets, ensuring fairness, transparency, and investor protection'.