The Japanese government has approved a draft bill that seeks to categorize cryptocurrencies as financial products, signaling a significant shift in the country's approach to regulating 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 aims to enhance oversight and transparency. If enacted during the current legislative session, the new law could come into effect as early as the 2027 fiscal year. Previously, Japan had primarily viewed cryptocurrencies through the lens of the Payment Services Act, focusing on aspects such as custody, anti-money laundering, and exchange registration.
The proposed regulations would not only ban insider trading but also require issuers to publish annual disclosures, thereby promoting transparency and accountability. Furthermore, the penalties for operating without registration would increase substantially, with potential prison sentences of up to 10 years and fines of up to 10 million yen, representing a significant escalation from the current three-year prison term.
The Securities and Exchange Surveillance Commission would be granted expanded powers to monitor and regulate the market. According to Minister for Financial Services Satsuki Katayama, this move is intended to 'broaden the availability of capital for growth, ensuring fairness, transparency, and investor protection in response to the evolving financial and capital markets.'