The Japanese government has given its approval to a proposed amendment that classifies cryptocurrencies as financial products, signaling a significant change in the country's regulatory approach to the sector. By bringing crypto assets under the Financial Instruments and Exchange Act, the same framework that governs stocks and other securities, Japan aims to enhance oversight.
According to reports by Nikkei, if the proposal passes during the current legislative session, it could come into effect by fiscal year 2027. Previously, cryptocurrencies were primarily regulated as payment tools under the Payment Services Act, focusing on aspects such as custody and anti-money laundering checks. The new rules introduce stricter regulations, including the prohibition of insider trading and the requirement for issuers to disclose information annually. Furthermore, penalties for operating without registration will increase, with potential prison sentences of up to 10 years and fines of up to 10 million yen, a significant increase from the current three years and lesser fines.
The Securities and Exchange Surveillance Commission will also be granted more authority to monitor the market. Minister for Financial Services, Satsuki Katayama, emphasized that these changes are intended to 'increase the availability of capital for growth, ensuring fairness, transparency, and investor protection in response to evolving financial and capital markets.'