The Japanese cabinet has given its approval to a proposed amendment aimed at categorizing cryptocurrencies as financial products, signaling a significant change in the country's regulatory approach to the sector. The proposal will bring cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, a legal framework currently applied to stocks and other securities, as reported by Nikkei. If the proposal is passed during the current parliamentary session, it could come into effect as early as the fiscal year 2027.
Until now, Japan has primarily viewed cryptocurrency as a means of payment, governed by 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 publish annual disclosures.
Additionally, penalties for operating without registration would increase, with potential prison sentences of up to 10 years, a rise from the current three years, and fines could reach as high as 10 million yen. The Securities and Exchange Surveillance Commission would also see its authority to monitor the market expanded.
According to Minister for Financial Services Satsuki Katayama, this move is intended to 'increase the supply of growth capital in response to changes in financial and capital markets, ensuring fairness, transparency, and the protection of investors in the market.'