The Japanese government has given the green light to a proposed amendment that aims to categorize cryptocurrencies as financial products, marking a significant shift in the country's approach to regulating the industry. By bringing cryptocurrency assets under the Financial Instruments and Exchange Act, the same framework that governs stocks and other securities, the proposal seeks to enhance regulatory oversight.
According to 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 viewed cryptocurrency through the lens of the Payment Services Act, focusing on aspects such as custody, anti-money laundering measures, and exchange registration.
The new regulations would not only prohibit insider trading but also require issuers to publish annual disclosures, thereby increasing transparency. Additionally, the 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-year imprisonment and lower fines. The Securities and Exchange Surveillance Commission would also see its authority expanded to better monitor and regulate the cryptocurrency market.
In a statement, the Minister for Financial Services, Satsuki Katayama, underscored the move as a response to the evolving financial and capital markets, aiming to ensure market fairness, transparency, and investor protection by broadening the availability of growth capital.