The Japanese cabinet has approved a proposed amendment to categorize cryptocurrencies as financial products, signaling a significant change in the country's regulatory approach to the sector. By bringing crypto assets under the Financial Instruments and Exchange Act, the same framework that governs stocks and other securities, Japan aims to enhance regulatory oversight. This development, reported by Nikkei, could see the law come into effect as early as fiscal 2027 if it passes during the current parliamentary session. Previously, cryptocurrencies were primarily viewed as payment tools under the Payment Services Act, with a focus on custody, anti-money laundering measures, and exchange registration.
The new rules would not only ban insider trading but also require issuers to publish annual disclosures, increasing transparency. Furthermore, penalties for operating without registration would increase, 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 also see its authority expanded to better monitor the market. According to Minister for Financial Services Satsuki Katayama, this move is intended to 'expand the supply of growth capital in response to changes in the financial and capital markets, ensuring market fairness, transparency, and the protection of investors.'