The Japanese government has approved a proposed amendment that aims to categorize cryptocurrencies as financial products, signaling a significant change in the nation'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 new rules would align cryptocurrency regulation more closely with that of traditional financial instruments.
If enacted during the current parliamentary session, the legislation could come into effect by fiscal year 2027. Previously, Japan regulated cryptocurrencies primarily as a means of payment under the Payment Services Act, focusing on aspects such as custody, anti-money laundering, and exchange registration.
The revised framework would not only ban insider trading but also require issuers to publish annual reports. 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 prison term. The Securities and Exchange Surveillance Commission would be granted broader powers to oversee and enforce compliance within the market.
According to Minister for Financial Services Satsuki Katayama, this move is intended to enhance the availability of growth capital in response to evolving financial and capital markets, ensuring fairness, transparency, and investor protection.