The Japanese cabinet has endorsed a proposed amendment aimed at categorizing cryptocurrencies as financial products, signaling a significant shift in the nation's regulatory approach to the sector. By bringing crypto assets under the purview of the Financial Instruments and Exchange Act, the same framework that governs stocks and other securities, the proposal, as reported by Nikkei, could become law as early as fiscal 2027 if approved during the current parliamentary session.
Previously, Japan regulated crypto primarily as a payment method under the Payment Services Act, focusing on aspects such as custody, anti-money laundering, and exchange registration. The new rules would not only ban insider trading but also require issuers to publish annual reports. Additionally, penalties for operating without registration would increase, with potential prison sentences of up to 10 years and fines of up to 10 million yen, a significant rise 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 'enhance the availability of growth capital in response to shifts in financial and capital markets, ensuring fairness, transparency, and investor protection in the market'.