Japan's cabinet has greenlit a draft amendment aimed at categorizing cryptocurrencies as financial products, signaling a significant regulatory shift in the country's approach to the sector. The proposed legislation would bring cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, a framework currently governing stocks and other securities, as reported by Nikkei. If approved during the current parliamentary session, the new law could come into effect as early as 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 revised rules would introduce a ban on insider trading and require issuers to publish annual disclosures, enhancing transparency. Additionally, penalties for operating without registration would increase, with potential prison sentences of up to 10 years, a rise from the current three years, and fines could reach 10 million yen. The Securities and Exchange Surveillance Commission would also see its authority expanded to more effectively monitor 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 financial and capital markets, ensuring fairness, transparency, and protection for investors.'