The Japanese government has approved a proposed amendment to classify cryptocurrencies as financial products, marking a significant change in the country'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 aims to enhance oversight and transparency. According to Nikkei, if the proposal is passed during the current parliamentary session, it could come into effect as early as fiscal year 2027.
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 introduce stricter regulations, including the prohibition of insider trading and the requirement for issuers to publish annual disclosures. Penalties for operating without registration would also 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 be granted broader powers to monitor and regulate the market.
Minister for Financial Services Satsuki Katayama emphasized that this move aims to 'increase the supply of growth capital in response to changes in financial and capital markets, ensuring fairness, transparency, and investor protection'.