The Japanese government has given its approval to a proposed amendment that aims to categorize cryptocurrencies as financial products, signaling a significant change in the country's regulatory approach to the sector. This proposal 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 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 regulations would prohibit insider trading and require issuers to release 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 years and lesser fines. The Securities and Exchange Surveillance Commission would also see its authority expanded to better monitor the market. According to Minister for Financial Services Satsuki Katayama, this move is intended to 'increase the availability of capital for growth in response to shifts in financial and capital markets, ensuring fairness, transparency, and investor protection in the market.'