The Japanese cabinet has endorsed a legislative amendment aimed at categorizing cryptocurrencies as financial products, signaling a significant shift in the nation's regulatory approach. By bringing crypto assets under the purview of the Financial Instruments and Exchange Act, the same framework governing stocks and securities, the proposal aligns crypto regulation more closely with traditional financial instruments, as reported by Nikkei. If ratified during the current parliamentary session, the legislation could come into effect as early as the 2027 fiscal year.
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 revised rules would not only prohibit insider trading but also require issuers to publish annual disclosures, enhancing transparency. 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, a significant escalation from current penalties. The Securities and Exchange Surveillance Commission would also see its authority expanded to more effectively monitor the market.
According to Minister for Financial Services Satsuki Katayama, this move is designed to 'increase the supply of growth capital in response to shifts in financial and capital markets, ensuring fairness, transparency, and investor protection.'