The Japanese government has greenlit a legislative amendment aimed at redefining cryptocurrencies as financial products, signaling a significant regulatory shift. By bringing cryptocurrency assets under the purview of the Financial Instruments and Exchange Act - the same framework governing stocks and securities - the proposal, as reported by Nikkei, could become law as early as 2027 if approved in the current parliamentary session.
Previously, Japan's regulatory approach to crypto was primarily as a payment method under the Payment Services Act, focusing on aspects like custody, anti-money laundering, and exchange registration. The proposed regulations would outlaw insider trading and compel issuers to release yearly disclosures. Penalties for operating without registration would increase to a maximum of 10 years imprisonment and 10 million yen in fines, up from the current three years. The Securities and Exchange Surveillance Commission's authority to monitor the market would also be expanded.
According to Minister for Financial Services Satsuki Katayama, 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.'