Japan's cabinet has given its approval to a proposed amendment that aims to categorize cryptocurrencies as financial products, signaling a significant change in the country's approach to regulating the industry. By bringing crypto assets under the purview of the Financial Instruments and Exchange Act, the same framework that governs stocks and other securities, the proposal aligns crypto regulation more closely with traditional financial markets, as reported by Nikkei. If the law is passed during the current parliamentary session, it could come into effect as early as the fiscal year 2027. Previously, Japan has primarily viewed and regulated crypto as a payment method under the Payment Services Act, focusing on aspects such as custody, anti-money laundering measures, and exchange registration.
The new regulations would not only ban insider trading but also require issuers to publish their financial disclosures annually. Additionally, the 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, a significant rise from the current three years and lesser fines.
The Securities and Exchange Surveillance Commission would be granted broader powers to oversee and enforce compliance within 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 the protection of investors.'