Japan's government has greenlit a legislative amendment aimed at categorizing cryptocurrencies as financial products, signaling a significant regulatory shift. This proposal would bring digital assets under the purview of the Financial Instruments and Exchange Act, similar to traditional securities. If enacted during the current parliamentary session, the legislation could become effective by fiscal year 2027. Previously, Japan regulated crypto primarily as a payment method under the Payment Services Act, focusing on aspects like custody, anti-money laundering, and exchange registration.
The revised rules would outlaw insider trading and compel issuers to release annual reports. Penalties for non-compliance would increase, with unregistered operators facing up to a decade in prison and fines of up to 10 million yen. The Securities and Exchange Surveillance Commission would be granted enhanced powers to oversee the market.
According to Minister for Financial Services Satsuki Katayama, this move aims to 'broaden the availability of growth capital in response to evolving financial and capital markets, ensuring fairness, transparency, and investor protection.'