The Japanese cabinet has approved a draft bill that aims to categorize cryptocurrencies as financial products, signaling a significant change in the country's approach to regulating the cryptocurrency sector. By bringing crypto assets under the purview of the Financial Instruments and Exchange Act, the same framework that governs stocks and other securities, Japan is poised to enhance regulatory oversight. According to Nikkei, if the proposal is passed during the current parliamentary session, it could come into effect as early as fiscal year 2027.
Previously, Japan regulated crypto primarily as a payment method under the Payment Services Act, focusing on aspects such as custody, anti-money laundering, and exchange registration. The proposed regulations would introduce a ban on 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, a significant escalation from the current three-year imprisonment and lower fines. The Securities and Exchange Surveillance Commission would also see its authority expanded to more effectively monitor the market.
Minister for Financial Services Satsuki Katayama emphasized that this move is intended to enhance the availability of capital for growth, ensuring fairness, transparency, and investor protection in the evolving financial and capital markets.