The Japanese government has taken a significant step towards reforming its cryptocurrency regulations by approving a draft amendment that classifies digital currencies as financial products. This move marks a significant shift in the country's approach to the cryptocurrency sector, bringing it under the purview of the Financial Instruments and Exchange Act, the same framework that governs stocks and other securities.
According to reports by Nikkei, if this proposal is passed during the current parliamentary session, it could come into effect as early as fiscal 2027. Previously, cryptocurrencies were primarily treated as payment tools under the Payment Services Act, with a focus on aspects such as custody, anti-money laundering checks, and exchange registration.
The new rules aim to introduce stricter oversight, including the prohibition of insider trading and the requirement for issuers to publish annual disclosures. Furthermore, penalties for operating without proper registration are set to 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 is also poised to receive broader powers to monitor and regulate the market. In a press conference, the Minister for Financial Services, Satsuki Katayama, emphasized that these changes are designed to 'expand the supply of growth capital in response to changes in the financial and capital markets, ensuring market fairness, transparency, and the protection of investors'.