The new rules ban insider trading, require issuers to publish annual disclosures, and impose stricter penalties: up to 10 years in prison and 10 million yen in fines for operating without registration.

What to know:

• Japan’s cabinet approved a draft amendment classifying cryptocurrencies as financial products under the Financial Instruments and Exchange Act, shifting from treating them as payment tools. The law could take effect in fiscal 2027.
• The new rules ban insider trading, require issuers to publish annual disclosures and impose stricter penalties: up to 10 years in prison and 10 million yen ($62,800) in fines for operating without registration.
• The move aims to expand capital supply, ensure market fairness and protect investors.

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, Nikkei reported. If passed during the current parliament session, the law could take effect as early as fiscal 2027.

Until now, Japan has treated crypto mainly as a payment tool under the Payment Services Act. That approach focused on custody, anti-money laundering checks and exchange registration. The new rules would ban insider trading and require issuers to publish annual disclosures.

Penalties would also rise. Operating without registration could bring up to 10 years in prison, up from three, and fines could increase to 10 million yen ($62,800). The Securities and Exchange Surveillance Commission would gain broader authority to police the market.

In a press conference, Minister for Financial Services Satsuki Katayama said the move will “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.”