The Japanese government has given the green light to a proposed amendment that aims to categorize cryptocurrencies as financial products, signaling a significant shift in the nation's regulatory approach to the sector. This move would bring cryptocurrencies under the purview of the Financial Instruments and Exchange Act, the same regulatory framework that governs stocks and other securities, as reported by Nikkei.
If the proposal is passed during the current parliamentary session, it could come into effect as early as the 2027 fiscal year. Previously, Japan treated cryptocurrencies primarily as payment tools under the Payment Services Act, focusing on aspects such as custody, anti-money laundering checks, and exchange registration.
The proposed regulations would outlaw insider trading and require issuers to publish annual disclosures, enhancing transparency. Additionally, the penalties for operating without proper registration would increase, with potential prison sentences of up to 10 years and fines of up to 10 million yen. The Securities and Exchange Surveillance Commission would also see its authority expanded to more effectively monitor the market.
According to Minister for Financial Services Satsuki Katayama, this change is intended to 'increase the availability of capital for growth in response to the evolving financial and capital markets, ensuring fairness, transparency, and investor protection'.