The Japanese cabinet has endorsed a legislative amendment that seeks to categorize cryptocurrencies as financial products, signaling a significant shift in the nation's regulatory approach to the cryptocurrency sector. By bringing crypto assets under the purview of the Financial Instruments and Exchange Act, which currently governs stocks and other securities, the proposal aligns crypto regulation more closely with that of traditional financial instruments. According to reports by Nikkei, if this legislation is passed during the current parliamentary session, it could come into effect as early as fiscal year 2027. Previously, Japan has primarily viewed cryptocurrency through the lens of the Payment Services Act, focusing on aspects such as custody, anti-money laundering measures, and exchange registration.
The new framework would explicitly prohibit insider trading and require issuers to disclose information annually. Furthermore, penalties for operating without proper registration would increase, with potential prison sentences of up to 10 years and fines of up to 10 million yen. The Securities and Exchange Surveillance Commission would also see its authority to monitor and regulate the market expanded.
Minister for Financial Services Satsuki Katayama emphasized that this move is intended to 'broaden the availability of capital for growth, in response to evolving financial and capital markets, thereby ensuring fairness, transparency, and investor protection.'