The Japanese government has endorsed a draft amendment aimed at categorizing cryptocurrencies as financial products, signaling a significant shift in the nation's regulatory approach to the sector. By bringing cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, which currently governs stocks and other securities, the proposal aligns crypto regulation more closely with traditional financial instruments. According to reports by Nikkei, if the law is passed during the current parliamentary session, it could be enforced as early as fiscal year 2027. Historically, Japan has regulated crypto primarily as a payment method under the Payment Services Act, focusing on aspects such as custody, anti-money laundering measures, and exchange registration.
The new regulations would introduce stricter measures, including the prohibition of insider trading and the requirement for issuers to release annual financial disclosures. Additionally, penalties for operating without proper registration would increase substantially, with potential prison sentences of up to 10 years and fines of up to 10 million yen, a significant rise from the current three-year imprisonment and lower fines. The Securities and Exchange Surveillance Commission would also see its authority expanded to more effectively monitor and regulate the market. In a statement, Minister for Financial Services Satsuki Katayama emphasized that these changes are designed to enhance the availability of capital for growth, ensuring fairness, transparency, and investor protection in the evolving financial and capital markets.