The Japanese cabinet has given its approval to a draft amendment aimed at categorizing cryptocurrencies as financial products, signaling a significant change in the country's regulatory approach to the sector. By bringing crypto assets under the purview of the Financial Instruments and Exchange Act, the same framework that governs stocks and other securities, the proposal aligns crypto regulation more closely with traditional financial instruments, as reported by Nikkei. If the law is passed during the current parliamentary session, it could come into effect as early as the fiscal year 2027. Previously, Japan has primarily viewed cryptocurrency through the lens of the Payment Services Act, focusing on aspects such as custody, anti-money laundering measures, and exchange registration.
The new rules would not only ban insider trading but also require issuers to publish disclosures on an annual basis. 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 to monitor the market expanded. According to Minister for Financial Services Satsuki Katayama, this move 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.'