Japan's cabinet has greenlit a proposed amendment to categorize cryptocurrencies as financial products, signaling a significant change in the country's regulatory approach to the sector. The draft legislation would bring cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, the same framework that governs stocks and other securities, as reported by Nikkei. If enacted during the current parliamentary session, the new law could come into effect as early as the 2027 fiscal year. Previously, Japan has primarily viewed cryptocurrency through the lens of the Payment Services Act, focusing on aspects such as custody, anti-money laundering measures, and exchange registration.
The proposed rules would extend beyond these areas by prohibiting insider trading and requiring issuers to disclose their financial information annually. 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, significantly higher than the current three-year imprisonment and lower fines. The Securities and Exchange Surveillance Commission would also see its authority to monitor and regulate the market expanded. According to Minister for Financial Services Satsuki Katayama, this move aims to 'increase the availability of growth capital in response to shifts in financial and capital markets, ensuring fairness, transparency, and investor protection in the market.'