The Japanese government has given its approval to a proposed amendment that aims to categorize cryptocurrencies as financial products, signaling a significant change in the nation's regulatory approach to the cryptocurrency sector. 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 this proposal is passed during the current parliamentary session, it could come into effect as early as the fiscal year 2027.
Previously, Japan has primarily viewed cryptocurrency through the lens of 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 disclosures. Additionally, 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, a significant rise from the current three years and lesser fines.
The Securities and Exchange Surveillance Commission would also be granted broader powers to monitor and regulate the market. According to Minister for Financial Services Satsuki Katayama, this move is intended to increase the availability of capital for growth, ensuring fairness, transparency, and investor protection in response to the evolving financial and capital markets.