Japan's cabinet has endorsed a proposed amendment aimed at categorizing cryptocurrencies as financial products, signaling a significant shift in the country's regulatory approach to the sector. By bringing cryptocurrency assets under the Financial Instruments and Exchange Act, which currently governs stocks and other securities, the proposal aligns crypto regulation more closely with that of traditional financial instruments. This change, reported by Nikkei, could come into effect as early as fiscal 2027 if approved during the current parliamentary session.
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 framework would not only ban insider trading but also require issuers to publish annual disclosures, enhancing transparency. Furthermore, 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 escalation from current penalties. 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 'enhance the availability of growth capital in response to evolving financial and capital markets, ensuring fairness, transparency, and investor protection.'