The Japanese cabinet has endorsed a proposed amendment aimed at categorizing cryptocurrencies as financial products, signaling a significant regulatory shift. This proposal aligns crypto assets with the regulatory framework governing stocks and securities under the Financial Instruments and Exchange Act, as reported by Nikkei. If approved during the current parliamentary session, the legislation could come into effect as early as fiscal year 2027.
Previously, Japan regulated crypto primarily as a payment method under the Payment Services Act, focusing on aspects such as custody, anti-money laundering, and exchange registration. The new regulations will introduce a ban on insider trading and require issuers to publish annual reports. Penalties for operating without registration will increase to up to 10 years in prison 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 will also see its authority expanded to better police the market.
According to Minister for Financial Services Satsuki Katayama, this move is intended to 'increase the availability of growth capital in response to changes in financial and capital markets, ensuring fairness, transparency, and investor protection.'