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. By bringing crypto assets under the Financial Instruments and Exchange Act, the same framework that governs stocks and other securities, Japan aims to enhance oversight.
This shift could become law as early as fiscal 2027 if approved in the current parliamentary session. Previously, Japan regulated crypto primarily as a payment method under the Payment Services Act, focusing on aspects like custody and anti-money laundering checks. The new rules would not only ban insider trading but also require issuers to publish annual disclosures, increasing transparency.
Furthermore, penalties for operating without registration would increase, with potential prison sentences of up to 10 years and fines of up to 10 million yen. The Securities and Exchange Surveillance Commission would also see its authority expanded to better 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 investor protection.'