The Japanese government has approved a legislative amendment aimed at categorizing cryptocurrencies as financial products, marking a significant shift in regulatory approach. By bringing cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, similar to traditional securities, the proposed law could be enacted as early as the 2027 fiscal year if approved in the current parliamentary session. Previously, cryptocurrencies were primarily regulated as payment methods under the Payment Services Act, with a focus on custody, anti-money laundering, and exchange registration. The new framework would introduce stricter regulations, including the prohibition of insider trading and the requirement for issuers to publish annual disclosure reports.
Furthermore, penalties for operating without proper registration would increase substantially, with potential prison sentences of up to 10 years and fines of up to 10 million yen, a significant increase from the current three-year imprisonment term. The Securities and Exchange Surveillance Commission would also be granted enhanced powers to oversee the market. According to Minister for Financial Services Satsuki Katayama, this move is intended to 'broaden the availability of capital for growth in response to evolving financial and capital markets, ensuring fairness, transparency, and investor protection.'