Japan's cabinet has given the green light to a proposed amendment that will categorize cryptocurrencies as financial products, marking a significant change in the country's approach to regulating the industry. By bringing cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, which currently governs stocks and other securities, the proposal aims to establish a more comprehensive framework for the sector. According to reports by Nikkei, if the law is passed during the current parliamentary session, it could come into effect as early as fiscal year 2027. Previously, Japan has primarily viewed cryptocurrency as a means of payment, governed by the Payment Services Act, with a focus on aspects such as custody, anti-money laundering checks, and exchange registration.
The new regulations will not only ban insider trading but also require issuers to publish annual disclosures, enhancing transparency and accountability. Furthermore, penalties for operating without proper registration will increase, 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 term. The Securities and Exchange Surveillance Commission will also be granted broader powers to monitor and regulate the market.
Minister for Financial Services Satsuki Katayama emphasized that this move is designed to 'increase the availability of capital for growth, in response to the evolving financial and capital markets, while ensuring fairness, transparency, and investor protection.'