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 subjects crypto assets to the Financial Instruments and Exchange Act, a framework used for stocks and other securities, Nikkei reported. If passed during the current legislative session, the law could take effect as early as fiscal year 2027.
Until now, Japan has treated crypto primarily as a payment tool under the Payment Services Act. This approach focused on custody, anti-money laundering controls and foreign exchange recording. The new rules would prohibit insider trading and require issuers to publish annual information.
Penalties would also increase. Operating without registration could result in up to 10 years in prison, up from three, and fines could reach 10 million yen ($62,800). The Securities and Exchange Surveillance Commission would gain broader authority to police the market.
At a news conference, Financial Services Minister Satsuki Katayama said the move would “expand the supply of growth capital in response to changes in the financial and capital markets, ensuring market fairness, transparency and investor protection.”
