The Japanese government has given its approval to a proposed amendment that aims to categorize cryptocurrencies as financial assets, thereby altering the regulatory landscape for the industry. By bringing crypto assets under the purview of the Financial Instruments and Exchange Act, which currently governs stocks and other securities, the new law is expected to come into effect as early as fiscal year 2027 if it passes in the current parliamentary session. This move marks a significant shift from Japan's previous approach, where cryptocurrencies were primarily viewed as a means of payment under the Payment Services Act, focusing on aspects such as custody, anti-money laundering checks, and exchange registration.
The proposed regulations would prohibit insider trading and require issuers to disclose information annually. Additionally, stricter penalties would be imposed, with unregistered operations potentially leading to 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 be granted broader powers to oversee the market. According to Minister for Financial Services Satsuki Katayama, this new approach is intended to 'increase the availability of capital for growth, ensuring fairness, transparency, and investor protection in response to evolving financial and capital markets.'