The Japanese cabinet has approved a proposed amendment that would categorize cryptocurrencies as financial assets, marking a significant shift in the country's regulatory approach to the sector. The draft brings cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, a regulatory framework currently applied to stocks and other securities.
According to reports by Nikkei, if this proposal is passed during the current parliamentary session, it could come into effect as early as the fiscal year 2027. Previously, 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 regulations would introduce a ban on insider trading and require issuers to publish annual disclosures. 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-year imprisonment and lower fines.
The Securities and Exchange Surveillance Commission would also see its authority expanded to more effectively monitor the market. In a press conference, the Minister for Financial Services, Satsuki Katayama, stated that this move aims to 'increase the availability of capital for growth in response to the evolving financial and capital markets, ensuring fairness, transparency, and the protection of investors.'