The Japanese government has greenlit a proposed amendment 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 purview of the Financial Instruments and Exchange Act, which currently governs stocks and other securities, the new rules aim to enhance regulatory oversight. If approved during the current parliamentary session, the legislation could come into effect as early as fiscal year 2027. Previously, Japan treated cryptocurrency primarily as a means of payment under the Payment Services Act, focusing on aspects such as custody, anti-money laundering measures, and exchange registration.
The revised framework will introduce a ban on insider trading and require issuers to publish annual disclosures, thereby promoting transparency and accountability. Furthermore, penalties for operating without registration will increase, 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 imprisonment and lower fines. The Securities and Exchange Surveillance Commission will also be granted broader powers to monitor and regulate the market. According to Minister for Financial Services Satsuki Katayama, this move is intended to 'increase the availability of growth capital in response to evolving financial and capital markets, ensuring fairness, transparency, and investor protection'.