The Japanese cabinet has given its approval for a proposed amendment that would categorize cryptocurrencies as financial assets, signaling a significant change in the nation's regulatory approach to the sector. This proposal would bring cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, a regulatory framework currently applied to stocks and other securities, as reported by Nikkei. If the proposal is passed during the current parliamentary session, it could come into effect as early as the fiscal year 2027. Previously, Japan has primarily treated cryptocurrency as a payment method under the Payment Services Act, focusing on aspects such as custody, anti-money laundering checks, and exchange registration.
The new regulations would introduce a ban on insider trading and require issuers to publish annual disclosures. Additionally, penalties for operating without registration would increase, with potential imprisonment of up to 10 years, a rise from the current three years, and fines could reach up to 10 million yen. The Securities and Exchange Surveillance Commission would be granted broader powers to monitor the market. According to Minister for Financial Services Satsuki Katayama, this move is intended to 'increase the supply of growth capital in response to changes in the financial and capital markets, ensuring fairness, transparency, and protection for investors.'