Japan's cabinet has endorsed a bill to categorize cryptocurrencies as financial products, signaling a significant change in the country's regulatory approach to the industry. The proposed legislation would bring cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, the same framework that governs stocks and other securities, as reported by Nikkei.
If approved during the current parliamentary session, the new law could come into effect as early as fiscal year 2027. Previously, Japan had primarily treated cryptocurrency as a means of payment under the Payment Services Act, focusing on aspects such as custody, anti-money laundering measures, and exchange registration.
The new rules would introduce a ban on insider trading and require issuers to publish annual disclosure reports. Penalties for non-compliance would increase, with unregistered operations potentially resulting in up to 10 years in prison, a rise from the current three years, and fines could reach 10 million yen, approximately $62,800.
The Securities and Exchange Surveillance Commission would also be granted expanded authority to oversee the market. According to Minister for Financial Services Satsuki Katayama, this move aims to 'increase the supply of growth capital in response to changes in financial and capital markets, ensuring market fairness, transparency, and investor protection.'