The Japanese government has approved a proposed amendment aimed at categorizing cryptocurrencies as financial products, signifying a major change in the country's regulatory approach to the industry. By bringing cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, which currently governs stocks and other securities, the proposal aligns crypto regulation more closely with that of traditional financial instruments. This shift could become law as early as fiscal 2027 if approved during the current parliamentary session. Previously, Japan regulated crypto primarily as a payment method under the Payment Services Act, focusing on aspects such as custody, anti-money laundering, and exchange registration.
The amended rules would introduce a ban on insider trading and require issuers to publish annual financial disclosures. Additionally, penalties for operating without proper registration would increase significantly, with potential prison sentences of up to 10 years and fines of up to 10 million yen, representing a substantial increase from the current three-year imprisonment and lower fines. The Securities and Exchange Surveillance Commission would also see its authority expanded to more effectively monitor and regulate the cryptocurrency market.
According to Minister for Financial Services Satsuki Katayama, this move is intended to enhance the availability of capital for growth, ensuring fairness, transparency, and investor protection within the evolving financial and capital markets.