The Japanese government has approved a draft bill that aims to categorize cryptocurrencies as financial products, marking a significant change in the country's regulatory approach to the industry. The proposed legislation would bring cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, the same framework that governs stocks and other securities, as reported by Nikkei. If the bill 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 means of payment, regulated under the Payment Services Act, with a focus on aspects such as custody, anti-money laundering, and exchange registration.
The new rules would prohibit 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, a significant rise from the current three years and lesser fines.
The Securities and Exchange Surveillance Commission would also be granted broader powers to oversee the market. According to Minister for Financial Services Satsuki Katayama, this move is intended to 'increase the supply of growth capital in response to changes in financial and capital markets, ensuring fairness, transparency, and investor protection.'