Japan's cabinet has approved a proposed amendment to categorize cryptocurrencies as financial products, signaling a significant change in the country's regulatory approach to the sector. The proposed legislation would bring crypto assets under the purview of the Financial Instruments and Exchange Act, which currently governs stocks and other securities, as reported by Nikkei.
If enacted during the current parliamentary session, the new law could come into effect as early as fiscal year 2027. Previously, Japan had primarily treated cryptocurrency as a payment method under the Payment Services Act, focusing on aspects such as custody, anti-money laundering checks, and exchange registration. The revised rules would introduce a ban on insider trading and require issuers to publish annual disclosures.
Additionally, penalties for operating without registration would increase, with potential imprisonment of up to 10 years and fines of up to 10 million yen, a significant rise from the current three years and associated fines. The Securities and Exchange Surveillance Commission would also be granted broader powers to regulate the market.
According to Minister for Financial Services Satsuki Katayama, this move aims to 'increase the supply of growth capital in response to changes in financial and capital markets, ensuring market fairness, transparency, and investor protection'.