Japan's cabinet has endorsed a proposed amendment to categorize cryptocurrencies as financial assets, signaling a significant shift in the country's regulatory approach to the sector. By bringing crypto assets under the Financial Instruments and Exchange Act, the same framework governing stocks and other securities, Japan is poised to enhance oversight.
If the proposal is passed during the current parliamentary session, it could come into effect as early as fiscal 2027. Previously, cryptocurrencies were primarily viewed as payment tools under the Payment Services Act, with a focus on custody, anti-money laundering checks, and exchange registration. The new rules would not only ban insider trading but also require issuers to publish annual disclosures, increasing transparency.
Furthermore, penalties for operating without 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 penalties. The Securities and Exchange Surveillance Commission would also receive broader authority to monitor the market. According to Minister for Financial Services Satsuki Katayama, this move is designed to 'increase the supply of growth capital in response to changes in financial and capital markets, ensuring market fairness, transparency, and investor protection'.