The Japanese cabinet has approved a draft bill that aims 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, which currently governs stocks and other securities, the proposal seeks to align cryptocurrency regulations with those of traditional financial instruments, as reported by Nikkei.
If the bill is passed during the current parliamentary session, it could come into effect as early as 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, and exchange registration. The proposed regulations will introduce a ban on insider trading and require issuers to publish annual disclosures, enhancing transparency and regulatory oversight.
Penalties for non-compliance will also increase, with unregistered operations potentially resulting in prison sentences of up to 10 years and fines of up to 10 million yen, a significant escalation from the current three-year imprisonment and lower fines. The Securities and Exchange Surveillance Commission is set 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 growth capital in response to shifts in financial and capital markets, ensuring fairness, transparency, and investor protection in the market.'