The Japanese government has endorsed a legislative amendment aimed at categorizing cryptocurrencies as financial products, signaling a significant change in the nation's regulatory approach to the cryptocurrency sector. The proposed legislation would bring cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, a legal framework currently governing stocks and other securities, as reported by Nikkei.
If the law is enacted during the current parliamentary session, it could come into effect as early as the 2027 fiscal year. Previously, Japan has 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 new regulations would outlaw insider trading and compel issuers to release annual disclosures. Additionally, penalties for operating without registration would increase, with potential prison sentences of up to 10 years, a rise from the current three years, and fines could reach 10 million yen, approximately $62,800.
The Securities and Exchange Surveillance Commission would also see its authority to monitor the market expanded. According to Minister for Financial Services Satsuki Katayama, this move is intended to 'enhance the supply of growth capital in response to shifts in financial and capital markets, ensuring fairness, transparency, and investor protection in the market.'