Japan's cabinet has approved a proposed amendment to categorize cryptocurrencies as financial products, signaling a significant change in the country's regulatory approach to the sector. The draft brings cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, a framework currently applied to stocks and other securities. If enacted during the current parliamentary session, the new law could come into effect by fiscal year 2027.
Previously, Japan had primarily treated cryptocurrency as a payment method under the Payment Services Act, focusing on aspects such as custody, anti-money laundering checks, and exchange registration. The revised rules would introduce a ban on insider trading and obligate 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, representing a significant escalation from the current three-year imprisonment and lower fines. 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 aims to 'enhance the supply of growth capital in response to evolving financial and capital markets, ensuring fairness, transparency, and investor protection'.