The Japanese cabinet has endorsed a proposed amendment that aims to categorize cryptocurrencies as financial products, marking a significant shift in the country's regulatory approach to the sector. By bringing crypto assets under the purview of the Financial Instruments and Exchange Act, which currently governs stocks and other securities, the proposal seeks to enhance regulatory oversight.
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 has primarily treated cryptocurrency as a means of payment under the Payment Services Act, focusing on aspects such as 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, thereby increasing transparency.
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, a significant rise from the current three years and associated fines. The Securities and Exchange Surveillance Commission would be granted broader powers to monitor and regulate the market. In a press conference, the Minister for Financial Services, Satsuki Katayama, emphasized that this move is intended to 'increase the supply of growth capital in response to changes in financial and capital markets, ensuring fairness, transparency, and protection for investors'.