The Japanese government has endorsed a legislative amendment that seeks to reclassify cryptocurrencies as financial products, signaling a significant shift in the nation's regulatory approach to the cryptocurrency sector. By bringing digital assets under the purview of the Financial Instruments and Exchange Act, the same framework that governs stocks and other securities, the proposal aligns crypto regulation more closely with traditional financial markets, as reported by Nikkei. If approved during the current legislative session, these changes could become effective as early as the 2027 fiscal year. Previously, Japan had primarily viewed cryptocurrency through the lens of the Payment Services Act, focusing on aspects such as custody, anti-money laundering measures, and exchange registration.
The proposed rules would introduce a ban on insider trading and mandate that issuers publish annual disclosure reports. Furthermore, penalties for operating without proper registration would increase, with potential prison sentences of up to 10 years and fines of up to 10 million yen. The Securities and Exchange Surveillance Commission would also see its authority expanded to more effectively monitor and regulate the market.
According to Minister for Financial Services Satsuki Katayama, this move is intended to 'broaden the availability of capital for growth, in response to evolving financial and capital markets, while ensuring fairness, transparency, and investor protection.'