Japan's cabinet has endorsed a legislative amendment aimed at categorizing cryptocurrencies as financial products, marking a significant shift in the nation's regulatory approach to the sector. The proposed legislation would bring cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, a framework currently governing stocks and other securities, as reported by Nikkei. If approved during the current parliamentary session, the legislation could come into effect as early as the 2027 fiscal year.
Previously, Japan has primarily treated cryptocurrency as a payment method under the Payment Services Act, focusing on aspects such as custody, anti-money laundering checks, and exchange registration. The new regulations would prohibit insider trading and require issuers to publish annual disclosures.
Penalties for non-compliance would also increase, with unregistered operations potentially resulting in imprisonment of up to 10 years, a rise from the current three years, and fines increasing to 10 million yen. The Securities and Exchange Surveillance Commission would be granted enhanced authority to oversee the market. According to Minister for Financial Services Satsuki Katayama, this move aims to 'increase the availability of growth capital in response to changes in financial and capital markets, ensuring fairness, transparency, and investor protection in the market.'