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 oversight. This move could become law as early as fiscal 2027 if approved in the current parliamentary session.
Previously, cryptocurrencies were primarily viewed as payment tools under the Payment Services Act, with regulations focusing on custody, anti-money laundering, and exchange registration. The new rules introduce stricter measures, including a ban on insider trading and a requirement for issuers to publish annual disclosures. Penalties for operating without registration will increase to a maximum of 10 years in prison and 10 million yen in fines.
The Securities and Exchange Surveillance Commission will also receive broader powers to monitor the market. According to Minister for Financial Services Satsuki Katayama, this shift aims to 'increase the supply of growth capital in response to changes in financial and capital markets, ensuring fairness, transparency, and investor protection.'