The Japanese cabinet has endorsed a proposed amendment that aims to categorize cryptocurrencies as financial products, signaling a significant change in the country's regulatory approach to the sector. By bringing crypto assets under the Financial Instruments and Exchange Act, the same framework that governs stocks and other securities, the proposal aligns cryptocurrency regulation more closely with traditional financial instruments. According to reports by Nikkei, if this proposal is passed during the current parliamentary session, it could come into effect as early as the fiscal year 2027.
Previously, Japan had 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 rules would not only prohibit insider trading but also mandate that issuers publish disclosures on an annual basis. Additionally, the penalties for operating without proper registration would increase substantially, with potential prison sentences of up to 10 years and fines of up to 10 million yen, representing a significant escalation from the current three-year prison term. The Securities and Exchange Surveillance Commission is poised to receive broader powers to oversee and regulate the market.
In a statement, Minister for Financial Services Satsuki Katayama emphasized that these changes are intended to enhance the availability of growth capital in response to evolving financial and capital markets, ensuring fairness, transparency, and investor protection.