Japan’s cabinet has approved a draft amendment that would classify cryptocurrencies as financial products, marking a shift in how the country regulates the sector.
The proposal brings crypto assets under the Financial Instruments and Exchange Act, a framework used for stocks and other securities, the Nikkei reported. If passed during the current parliamentary session, the law could come into force as early as the 2027 financial year.
Until now, Japan has primarily treated crypto as a payment tool under the Payment Services Act. This approach focused on custody, anti-money laundering controls and stock exchange registration. The new rules will prohibit insider trading and require issuers to publish annual information.
The penalty would also increase. Operating without registration can result in up to 10 years in prison, up from three, and fines can rise to 10 million yen ($62,800). The Securities and Exchange Surveillance Commission would be given broader authority to monitor the market.
At a press conference, Financial Services Minister Satsuki Katayama said the move will “expand the supply of growth capital in response to changes in financial and capital markets, ensuring market fairness, transparency and investor protection.”
