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 country's regulatory approach to the sector. The draft legislation brings 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 the proposal is passed during the current parliamentary session, it could become law as early as the fiscal year 2027. Until now, Japan has primarily viewed cryptocurrency as a means of payment, regulated under the Payment Services Act, with a focus on aspects such as custody, anti-money laundering checks, and exchange registration.
The new regulations would outlaw insider trading and require issuers to release annual reports. Penalties for non-compliance would also increase, with unregistered operations potentially resulting in prison sentences of up to 10 years, a rise from the current three years, and fines could reach as high as 10 million yen ($62,800). The Securities and Exchange Surveillance Commission would be granted broader powers to oversee the market. In a press briefing, Financial Services Minister Satsuki Katayama stated that this move aims 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.'