The Japanese cabinet has approved a proposed amendment aimed at categorizing cryptocurrencies as financial products, marking a significant shift in the country's regulatory approach to the industry. By bringing cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, the same framework that governs stocks and other securities, the government seeks to enhance regulatory oversight. According to reports by Nikkei, if the proposal is passed during the current parliamentary session, it could come into effect as early as the 2027 fiscal year. Previously, Japan's regulatory framework treated cryptocurrency primarily as a means of payment under the Payment Services Act, focusing on aspects such as custody, anti-money laundering measures, and exchange registration.
The new rules would introduce stricter regulations, including the prohibition of insider trading and the requirement for issuers to disclose information annually. Additionally, 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 lower fines. The Securities and Exchange Surveillance Commission would also be granted broader powers to monitor and regulate the market. In a press conference, the Minister for Financial Services, Satsuki Katayama, underscored the importance of this regulatory shift, stating that it aims to 'increase the supply of growth capital in response to changes in financial and capital markets, ensuring fairness, transparency, and investor protection'.