The Japanese government has approved a legislative amendment that would categorize cryptocurrencies as financial products, marking a significant shift in the country's regulatory approach to the industry. By bringing cryptocurrency assets under the Financial Instruments and Exchange Act, the same framework that governs stocks and other securities, Japan is poised to enhance oversight and transparency. This new framework could become effective as early as 2027 if approved during the current parliamentary session. Previously, cryptocurrencies were primarily viewed as a means of payment, regulated under the Payment Services Act, with a focus on secure custody, anti-money laundering measures, and exchange registration.
The proposed regulations would not only ban insider trading but also require issuers to publish annual disclosures, thereby promoting transparency and accountability. Furthermore, 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, representing a significant escalation from current penalties. The Securities and Exchange Surveillance Commission would be granted broader powers to monitor and regulate the market, ensuring fairness, transparency, and investor protection.
According to Minister for Financial Services Satsuki Katayama, this move is intended to increase the availability of capital for growth, responding to evolving financial and capital markets, while prioritizing market integrity and investor protection.