The Japanese government has approved a legislative amendment that aims to categorize cryptocurrencies as financial products, signaling a significant adjustment in the country's regulatory approach. By bringing crypto assets under the purview of the Financial Instruments and Exchange Act, which currently governs stocks and other securities, the proposed law could come into effect as early as 2027 if passed in the current parliamentary session. Previously, cryptocurrencies were primarily viewed as payment tools under the Payment Services Act, with a focus on custodial services, anti-money laundering measures, and exchange registration.
The revised rules would introduce a ban on insider trading and require issuers to publish annual financial disclosures. Additionally, penalties for operating without registration would 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 term.
The Securities and Exchange Surveillance Commission would also be granted enhanced powers to oversee 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 the financial and capital markets, ensuring fairness, transparency, and investor protection.'