The Japanese government has given its approval to a proposed amendment that aims to categorize cryptocurrencies as financial products, signaling a significant shift 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 regulatory framework that governs stocks and other securities, as reported by Nikkei. If the law is enacted 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 the registration of exchanges. The new regulations would introduce a prohibition on insider trading and require issuers to publish annual disclosure reports. 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, representing a significant escalation from the current three-year imprisonment and lower fines.
The Securities and Exchange Surveillance Commission would also be granted broader powers to oversee and regulate the market. According to Minister for Financial Services Satsuki Katayama, this move is intended to "enhance the availability of capital for growth in response to evolving financial and capital markets, ensuring fairness, transparency, and the protection of investors."