The Japanese government has approved a legislative amendment that aims to categorize cryptocurrencies as financial instruments, signaling a significant shift in the nation's regulatory approach to the cryptocurrency sector. By bringing cryptocurrencies under the purview of the Financial Instruments and Exchange Act, which currently governs stocks and other securities, the proposal aligns crypto assets with traditional financial products. This move, as reported by Nikkei, could become law as early as the 2027 fiscal year if it passes during the current parliamentary session.
Previously, Japan regulated crypto primarily as a means of payment under the Payment Services Act, focusing on aspects such as custody, anti-money laundering measures, and exchange registration. The proposed rules introduce stricter regulations, including a ban on insider trading and a requirement for issuers to disclose information annually. Additionally, the penalties for operating without proper registration will increase, with potential prison sentences of up to 10 years and fines of up to 10 million yen, significantly higher than the current three-year imprisonment and lower fines. The Securities and Exchange Surveillance Commission will be granted broader powers to oversee the market.
According to Minister for Financial Services Satsuki Katayama, this regulatory adjustment is intended to enhance market fairness, transparency, and investor protection, while also expanding the availability of capital for growth in response to evolving financial and capital markets.