Japan's cabinet has endorsed a proposed amendment to categorize cryptocurrencies as financial products, signaling a significant change in the country's approach to regulating the industry. By bringing crypto assets under the purview of the Financial Instruments and Exchange Act, which currently governs stocks and other securities, the new rules aim to enhance regulatory oversight. If approved during the current parliamentary session, the legislation could come into effect as early as the 2027 fiscal year. Previously, Japan had primarily viewed cryptocurrency through the lens of the Payment Services Act, focusing on aspects such as custody, anti-money laundering, and exchange registration.
The new framework would not only outlaw insider trading but also require issuers to publish annual reports. Additionally, 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, a significant rise from the current three-year imprisonment and lower fines. The Securities and Exchange Surveillance Commission would also see its authority expanded to better monitor and regulate the market.
According to Minister for Financial Services Satsuki Katayama, this move is intended to 'boost the supply of growth capital in response to evolving financial and capital markets, ensuring fairness, transparency, and investor protection.'