The Japanese cabinet has approved 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 crypto assets under the Financial Instruments and Exchange Act, the same framework that governs stocks and other securities, Japan is poised to align its crypto regulations more closely with those of traditional financial instruments.
This move, reported by Nikkei, could come into effect as early as fiscal 2027 if the proposal is passed during the current parliamentary session. Previously, Japan has primarily viewed and regulated cryptocurrency through the lens of 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 disclosures, significantly enhancing transparency.
Furthermore, 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 considerable rise from the current three-year imprisonment and lesser fines. This change would also grant the Securities and Exchange Surveillance Commission broader powers to oversee and regulate the market. According to Minister for Financial Services Satsuki Katayama, this regulatory shift 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.'