The Japanese cabinet has given its approval to a draft amendment aimed at categorizing cryptocurrencies as financial products, marking a significant change in the nation's regulatory approach to the sector. By bringing cryptocurrency assets under the purview of the Financial Instruments and Exchange Act - the same framework that governs stocks and other securities, as reported by Nikkei - the proposal sets the stage for a potential law that could come into effect as early as the 2027 fiscal year if it is passed during the current parliamentary session.
Until now, 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 new regulations would not only ban insider trading but also require issuers to publish disclosures annually. Furthermore, penalties for operating without proper 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 lesser fines. The Securities and Exchange Surveillance Commission would be granted broader powers to oversee the market.
Minister for Financial Services, Satsuki Katayama, emphasized during a press conference that this move is intended to 'increase the availability of capital for growth in response to evolving financial and capital markets, ensuring fairness, transparency, and investor protection within the market.'