The Japanese cabinet has given its approval to a draft amendment aimed at classifying cryptocurrencies as financial products, marking a significant shift in the country's regulatory approach to the cryptocurrency sector. This proposal seeks to bring 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.
If this proposal is passed during the current parliamentary session, it could come into effect as early as the fiscal year 2027. Until now, Japan has primarily viewed cryptocurrency through the lens of the Payment Services Act, focusing on aspects such as custody, anti-money laundering checks, and exchange registration. The new rules would introduce a ban on insider trading and require issuers to publish disclosures on an annual basis.
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, a significant increase from the current three years and lesser fines. The Securities and Exchange Surveillance Commission would also see its authority expanded to better police the market.
According to Minister for Financial Services Satsuki Katayama, this move is intended to 'expand the supply of growth capital in response to changes in the financial and capital markets, ensuring market fairness, transparency, and the protection of investors.'