The Japanese cabinet has endorsed a proposed amendment aimed at categorizing 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 approved during the current parliamentary session, these changes could come into effect as early as the 2027 fiscal year. Previously, cryptocurrencies were primarily viewed as payment tools, regulated under the Payment Services Act with a focus on aspects such as custody, anti-money laundering, and exchange registration.
The updated framework would not only prohibit insider trading but also require issuers to publish annual disclosures, enhancing transparency and regulatory oversight. Furthermore, penalties for operating without proper registration would increase substantially, with potential prison sentences of up to 10 years and fines reaching 10 million yen.
This shift in policy is intended to promote market fairness, transparency, and investor protection, according to Minister for Financial Services Satsuki Katayama, who emphasized the importance of adapting to evolving financial and capital markets to ensure the supply of growth capital.