Japan's cabinet has endorsed a draft amendment aimed at categorizing cryptocurrencies as financial products, signaling a significant shift in the country's regulatory approach to the sector. The proposed legislation would bring cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, a framework currently applied to stocks and other securities. According to Nikkei, if the law is passed during the current parliamentary session, it could come into effect as early as fiscal year 2027. Previously, Japan has primarily viewed cryptocurrency as a payment method under the Payment Services Act, focusing on aspects such as custody, anti-money laundering checks, and exchange registration.
The new rules would introduce a ban on insider trading and require issuers to publish annual disclosures. Additionally, penalties for operating without registration would increase, with potential prison sentences of up to 10 years and fines of up to 10 million yen, representing a significant rise from the current three-year imprisonment and lower fines. The Securities and Exchange Surveillance Commission would also be granted broader powers to regulate the market. Minister for Financial Services Satsuki Katayama emphasized that this move aims to 'increase the supply of growth capital in response to changes in financial and capital markets, ensuring market fairness, transparency, and investor protection.'