The Japanese cabinet has approved a proposed amendment that aims to categorize cryptocurrencies as financial products, signaling a significant shift in the nation's regulatory approach to the sector. By bringing crypto assets under the purview of the Financial Instruments and Exchange Act, a framework currently used for stocks and other securities, the proposal seeks to enhance regulatory oversight.
If enacted during the current parliamentary session, the new law could come into effect as early as fiscal year 2027. Previously, Japan had 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 regulations would not only ban insider trading but also require issuers to publish annual disclosures, thereby promoting transparency.
Furthermore, penalties for operating without proper registration would increase substantially, with potential prison sentences of up to 10 years and fines of up to 10 million yen. The Securities and Exchange Surveillance Commission would be granted 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 evolving financial and capital markets, ensuring fairness, transparency, and investor protection.'