The Japanese cabinet has approved a proposed amendment to categorize cryptocurrencies as financial products, signaling a significant change in the country's regulatory approach to the sector. By bringing crypto assets under the Financial Instruments and Exchange Act, which currently governs stocks and other securities, the proposal aims to enhance regulatory oversight.
If enacted during the current parliamentary session, the new law 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 revised rules would introduce a ban on insider trading and require issuers to publish annual disclosures, increasing transparency and accountability.
Additionally, penalties for operating without registration would be stiffened, with potential prison sentences of up to 10 years and fines of up to 10 million yen, representing a significant increase from the current three-year imprisonment and lower fines. The Securities and Exchange Surveillance Commission would also be granted broader powers to monitor and regulate the market. According to Minister for Financial Services Satsuki Katayama, this move is intended to 'increase the supply of growth capital in response to changes in financial and capital markets, ensuring fairness, transparency, and investor protection'.