The Japanese cabinet has greenlit a proposed amendment aimed at reclassifying cryptocurrencies as financial products, signaling a significant shift in the nation's regulatory approach to the sector. By bringing crypto assets under the purview of the Financial Instruments and Exchange Act - the same framework governing stocks and other securities - the government seeks to enhance oversight, as reported by Nikkei.
If the proposal is passed during the current parliamentary session, it could come into effect as early as fiscal year 2027. Previously, Japan has primarily regarded cryptocurrency as a payment method, regulated under the Payment Services Act, with a focus on aspects such as custody, anti-money laundering checks, and exchange registration. The new rules would introduce a ban on insider trading and require issuers to publicly disclose information on an annual basis.
Furthermore, 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 lesser fines. The Securities and Exchange Surveillance Commission is poised to receive 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 evolving financial and capital markets.'