The Japanese cabinet has endorsed a proposed amendment to categorize cryptocurrencies as financial products, signaling a significant shift in the country's regulatory approach to the sector. By bringing crypto assets under the Financial Instruments and Exchange Act, which currently governs stocks and other securities, the proposal aims to establish a more comprehensive framework for the industry. If approved during the current parliamentary session, the new law could come into effect by fiscal 2027. 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 revised rules would introduce stricter measures, including the prohibition of insider trading and the requirement for 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. 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 the financial and capital markets, ensuring market fairness, transparency, and investor protection'.