The Japanese cabinet has approved a proposed amendment to categorize 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, which currently governs stocks and other securities, the government aims to enhance oversight. If the amendment is passed during the current parliamentary session, it could come into effect as early as fiscal year 2027.
Previously, cryptocurrencies were primarily regulated as payment tools under the Payment Services Act, focusing on aspects such as custody, anti-money laundering measures, and exchange registration. The new framework would not only ban insider trading but also require issuers to publish annual disclosures, thereby increasing transparency. Additionally, penalties for operating without proper registration would be significantly increased, with potential prison sentences of up to 10 years and fines of up to 10 million yen.
The Securities and Exchange Surveillance Commission would be granted broader powers to monitor and regulate 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.'