The Japanese cabinet has endorsed a legislative amendment aimed at categorizing cryptocurrencies as financial products, signaling a significant adjustment in the nation's regulatory approach to the sector. This proposal integrates crypto assets into the existing framework for stocks and securities under the Financial Instruments and Exchange Act. If approved during the current parliamentary session, the legislation could be implemented as early as the 2027 fiscal year.
Previously, Japan regulated crypto primarily as a payment method under the Payment Services Act, focusing on aspects such as custody, anti-money laundering, and exchange registration. The updated rules will prohibit insider trading and require issuers to release annual reports. Additionally, penalties for operating without registration will increase, with potential prison sentences of up to 10 years and fines of up to 10 million yen, a significant rise from the current three-year imprisonment and lower fines. The Securities and Exchange Surveillance Commission will also be granted enhanced powers to monitor 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.'