The Japanese cabinet has endorsed a proposed amendment that would categorize cryptocurrencies as financial products, signaling a significant change in the nation's regulatory approach to the sector. This draft amendment would bring cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, the same regulatory framework that governs stocks and other securities, as reported by Nikkei. If this proposal is passed during the current parliamentary session, it could become effective as early as the fiscal year 2027. 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 proposed regulations would not only prohibit insider trading but also require issuers to publish annual disclosures, thereby enhancing transparency. Furthermore, the 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, significantly higher than the current three-year imprisonment and lower fines. The Securities and Exchange Surveillance Commission would be granted broader powers to oversee and regulate the market. According to Minister for Financial Services Satsuki Katayama, this move is intended to 'boost the supply of growth capital in response to shifts in financial and capital markets, ensuring fairness, transparency, and protection for investors'.