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. This proposal would bring cryptocurrency assets under the purview of the Financial Instruments and Exchange Act, a legal framework currently applied to stocks and other securities, as reported by Nikkei.
If the law is passed during the current parliamentary session, it could come into effect as early as the 2027 fiscal year. Previously, Japan has primarily viewed cryptocurrency as a means of payment under the Payment Services Act, focusing on aspects such as custody, anti-money laundering measures, and exchange registration. The new regulations would outlaw insider trading and require issuers to publish annual disclosures. Additionally, penalties for operating without registration would increase, with potential prison sentences of up to 10 years and fines of up to 10 million yen, a significant rise from the current three-year imprisonment and lower fines.
The Securities and Exchange Surveillance Commission would also be granted broader powers to monitor the market. According to Minister for Financial Services Satsuki Katayama, this move is intended to 'increase the supply of growth capital in response to changes in financial and capital markets, ensuring fairness, transparency, and protection for investors.'