The Japanese cabinet has endorsed a proposed amendment that classifies cryptocurrencies as financial assets, signaling a significant shift in the nation's regulatory approach to the sector. By bringing cryptocurrency under the purview of the Financial Instruments and Exchange Act, the same framework governing stocks and securities, the proposal aims to establish a more comprehensive regulatory environment. According to reports by Nikkei, if the law is passed during the current parliamentary session, it could come into effect as early as fiscal year 2027. Previously, Japan regulated cryptocurrency primarily as a payment method under the Payment Services Act, focusing on aspects such as custody, anti-money laundering, and exchange registration.
The new rules would not only prohibit insider trading but also require issuers to publish annual financial disclosures. Furthermore, penalties for operating without proper registration would increase, with potential prison sentences of up to 10 years and fines of up to 10 million yen, significantly higher than the current three-year imprisonment and lower fines.
The Securities and Exchange Surveillance Commission would be granted broader powers to oversee and regulate the market. In a press briefing, the Minister for Financial Services, Satsuki Katayama, emphasized that this move is intended to 'broaden the availability of capital for growth, ensuring fairness, transparency, and investor protection in response to evolving financial and capital markets.'