Coming into effect as early as next year! Japan passes amendment: classifies cryptocurrencies as "financial products" to strengthen regulation

On April 10, the Japanese government passed an amendment to the 《Financial Instruments and Exchange Act》, for the first time classifying cryptocurrencies as “financial products” and bringing them under regulation, strictly prohibiting the use of non-public information for insider trading.

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The Japanese government recently (4/10) convened a cabinet meeting and formally passed an amendment to the 《Financial Instruments and Exchange Act》. For the first time, it will classify cryptocurrencies as “financial products” for regulatory purposes, explicitly banning “insider trading” using non-public information, and requiring cryptocurrency issuers to make information disclosures once every year to help create a healthier market environment.

According to 《Nikkei News》, if the amendment is successfully passed by this session of the Diet, it is expected to take effect as early as fiscal year 2027.

In the past, Japan’s Financial Services Agency (FSA) had long treated cryptocurrencies as “means of payment” and regulated them under the 《Funds Settlement Act (Payment Services Act)》. However, as cryptocurrency investment has become increasingly prominent, the authorities decided to include it within the regulatory scope of the 《Financial Instruments and Exchange Act》, and the names of registered operators will change from the current “crypto asset exchange operators” to “crypto asset trading operators.”

To strengthen investor protection, the revised amendment significantly increases penalties. For those who sell tokens without registration, the maximum prison term will be raised from 3 years to 10 years; meanwhile, the fine cap will be increased by more than three times in one go, from 3 million yen to 10 million yen.

Japanese Finance Minister Shunichi Katayama emphasized at a press conference after the cabinet meeting: “In the face of the rapidly changing financial capital markets, we must ensure the fairness, transparency, and investor protection of the market while expanding the supply of growth capital.”

• This article is reprinted with authorization from: 《BlockTalk》
• Original title: 《Fastest to Be Implemented Next Year! Japan’s Cabinet Passes an Amendment: Cryptocurrencies Classified as “Financial Products” to Strengthen Regulation》
• Original author: Block Sister MEL