The Japanese cabinet has endorsed a draft amendment aimed at categorizing cryptocurrencies as financial products, signaling a significant change in the country's regulatory approach to the sector. By bringing crypto assets under the purview of 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 move, reported by Nikkei, could come into effect as early as fiscal 2027 if approved during the current parliamentary session.
Previously, Japan has primarily viewed crypto as a payment method, regulated under the Payment Services Act, with a focus on aspects such as custody, anti-money laundering, and exchange registration. The new rules would not only prohibit insider trading but also require issuers to publish disclosures on an annual basis. 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, a significant increase from the current three-year imprisonment and lesser fines.
The Securities and Exchange Surveillance Commission would be granted enhanced powers to oversee the market. According to Minister for Financial Services Satsuki Katayama, this shift is intended to 'expand the supply of growth capital in response to changes in the financial and capital markets, ensuring market fairness, transparency, and the protection of investors.'