The Japanese government has approved a legislative amendment aimed at categorizing cryptocurrencies as financial products, signaling a significant change in regulatory approach. By bringing crypto assets under the Financial Instruments and Exchange Act, the same framework that governs stocks and securities, the proposal aligns cryptocurrency regulation more closely with that of traditional financial instruments, as reported by Nikkei.
If enacted during the current parliamentary session, the legislation could become effective as early as the 2027 fiscal year. Previously, Japan regulated cryptocurrency primarily as a payment method under the Payment Services Act, focusing on aspects such as custody, anti-money laundering, and exchange registration. The proposed rules would introduce a ban on insider trading and require issuers to disclose information annually.
Penalties for operating without proper registration would increase, 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 be granted broader powers to oversee the market.
According to Minister for Financial Services Satsuki Katayama, this move is intended to 'enhance the availability of growth capital in response to evolving financial and capital markets, ensuring fairness, transparency, and investor protection.'