The Japanese government has given its approval to a proposed amendment that seeks to categorize cryptocurrencies as financial products, signaling a significant change in the country's approach to regulating the cryptocurrency sector. This proposal aims to bring crypto assets under the purview of the Financial Instruments and Exchange Act, which currently governs stocks and other securities, as reported by Nikkei. If this proposal is passed during the current parliamentary session, it could come into effect as early as the fiscal year 2027.
Previously, Japan has primarily viewed cryptocurrency as a means of payment, regulated under the Payment Services Act, with a focus on custody, anti-money laundering measures, and exchange registration. The new rules would prohibit insider trading and require issuers to disclose their financial information annually. Additionally, 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 rise from the current three-year imprisonment and lower fines. The Securities and Exchange Surveillance Commission would also be granted broader powers to oversee and regulate the market.
According to Minister for Financial Services Satsuki Katayama, this move is intended to increase the availability of capital for growth, ensuring fairness, transparency, and protection for investors in response to the evolving financial and capital markets.