The Japanese government has approved a legislative amendment that aims to categorize cryptocurrencies as financial products, signaling a significant change in the country's regulatory approach to the industry. By bringing cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, which currently governs stocks and other securities, the proposed law seeks to enhance oversight and transparency. This shift marks a departure from the existing framework, where cryptocurrencies were primarily viewed as a means of payment under the Payment Services Act, focusing on aspects such as custody and anti-money laundering measures.
The new regulations would not only ban insider trading but also require issuers to publish annual disclosures, thereby promoting transparency and accountability. Furthermore, 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. The Securities and Exchange Surveillance Commission would be granted broader powers to monitor and regulate the market, ensuring fairness and protecting investor interests. According to Minister for Financial Services Satsuki Katayama, this move is intended to increase the availability of capital for growth, ensuring market integrity and investor protection in response to evolving financial and capital markets.