The Japanese government has given its approval to a proposed amendment that aims to categorize cryptocurrencies as financial products, signaling a significant change in the country's approach to regulating the cryptocurrency sector. The proposal seeks to bring cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, a regulatory framework currently applied to stocks and other securities, as reported by Nikkei. If the law is passed during the current parliamentary session, it could come into effect as early as the fiscal year 2027.
Until now, Japan has primarily viewed cryptocurrency through the lens of 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 disclose information annually. 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, representing a significant escalation from the current three-year imprisonment and lower fines. The Securities and Exchange Surveillance Commission would also be granted broader powers to monitor and regulate the market.
According to Minister for Financial Services Satsuki Katayama, this move is intended to 'increase the availability of capital for growth in response to the evolving financial and capital markets, ensuring fairness, transparency, and protection for investors.'