Japan's cabinet has endorsed a proposed amendment to categorize cryptocurrencies as financial products, marking a significant shift in the country's regulatory approach to the sector. The draft amendment would bring cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, a regulatory framework currently applicable to stocks and other securities. According to reports by Nikkei, if the proposal is passed during the current parliamentary session, it could come into effect as early as the 2027 fiscal year. Previously, Japan had primarily treated cryptocurrency as a payment tool under the Payment Services Act, focusing on aspects such as custody, anti-money laundering checks, and exchange registration.
The new rules 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, representing a significant rise from the current three-year imprisonment and lower fines. The Securities and Exchange Surveillance Commission would also be granted broader powers to monitor the market. In a press conference, the Minister for Financial Services, Satsuki Katayama, stated 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.'