Japan's government has given the green light to a draft bill that aims to classify cryptocurrencies as financial products, marking a significant shift in the country's approach to regulating the cryptocurrency sector. By bringing crypto assets under the umbrella of the Financial Instruments and Exchange Act, which currently governs stocks and other securities, the proposed legislation would introduce stricter oversight.
According to reports by Nikkei, if the bill is passed during the current parliamentary session, it could come into effect as early as the 2027 fiscal year. Previously, Japan had primarily treated cryptocurrencies as payment tools, governed by the Payment Services Act, with a focus on custody, anti-money laundering checks, and exchange registration.
The new rules would not only ban insider trading but also require issuers to publish annual disclosures, thereby enhancing transparency. Furthermore, penalties for operating without 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 and lower fines. The Securities and Exchange Surveillance Commission would also see its authority expanded to better police the market.
In a press conference, the Minister for Financial Services, Satsuki Katayama, emphasized that this move is designed 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'.