The Japanese cabinet has given its approval to a draft amendment that aims to categorize cryptocurrencies as financial products. This change signals a new regulatory approach for the sector.
Under this proposal, crypto assets would be regulated by the Financial Instruments and Exchange Act, which currently governs stocks and other securities, according to Nikkei. The legislation could become effective in fiscal 2027 if it passes during the current parliamentary session.
Previously, Japan has viewed cryptocurrencies primarily as payment tools under the Payment Services Act, focusing on custody issues, anti-money laundering measures, and exchange registration. The proposed rules would prohibit insider trading and mandate issuers to release annual disclosures.
The penalties for non-compliance are set to increase significantly; operating without a license could result in up to 10 years of imprisonment, compared to the current three years, with fines rising to 10 million yen ($62,800). The Securities and Exchange Surveillance Commission would be granted expanded powers to oversee the market.
During a press conference, Financial Services Minister Satsuki Katayama stated that this move aims to “expand the supply of growth capital in response to changes in the financial and capital markets, ensuring market fairness, transparency, and the protection of investors.”