The Japanese cabinet has approved a draft amendment aimed at classifying 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 securities, Japan is poised to enhance oversight. According to Nikkei, if this proposal is passed during the current parliamentary session, it could come into effect as early as fiscal 2027.
Previously, Japan regulated crypto primarily as a payment method under the Payment Services Act, focusing on aspects like custody, anti-money laundering, and exchange registration. The new rules would not only prohibit insider trading but also require issuers to publish disclosures annually. Furthermore, 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 years and lesser fines. The Securities and Exchange Surveillance Commission would also see its authority expanded to better monitor the market.
In a recent press conference, Financial Services Minister Satsuki Katayama emphasized that this move is designed to increase the availability of growth capital in response to evolving financial and capital markets, ensuring fairness, transparency, and investor protection.