The Japanese cabinet has approved a proposed amendment to classify cryptocurrencies as financial products, signaling a significant regulatory shift. By bringing crypto assets under the Financial Instruments and Exchange Act, the same framework that governs stocks and securities, the country aims to enhance oversight. If enacted during the current parliamentary session, the new law could come into effect as early as fiscal year 2027. Previously, cryptocurrencies were primarily regulated as payment tools under the Payment Services Act, focusing on aspects such as custody, anti-money laundering, and exchange registration.
The revised rules will introduce stricter measures, including the prohibition of insider trading and the requirement for issuers to disclose information annually. Penalties for operating without proper registration will also 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 term. Furthermore, the Securities and Exchange Surveillance Commission will be granted broader powers to monitor and regulate the market.
According to Minister for Financial Services Satsuki Katayama, this move is intended to 'increase the availability of growth capital in response to evolving financial and capital markets, ensuring fairness, transparency, and investor protection.'