The Japanese government cabinet has approved a bill to classify cryptocurrencies as financial products
The Japanese government has passed an amendment to the Financial Instruments and Exchange Act at a cabinet meeting. This amendment regulates cryptocurrency assets (virtual currencies) as financial instruments for the first time and prohibits insider trading and other activities based on undisclosed information. At the same time, it requires cryptocurrency issuers to disclose information annually to improve the healthy market environment. If this bill is passed in the current Diet session, it is expected to be implemented as early as the 2027 fiscal year.
Previously, the Financial Services Agency of Japan primarily regulated cryptocurrencies based on their positioning as "means of payment" under the Funds Settlement Act. However, in recent years, the use of cryptocurrencies as investment tools has been increasing, leading to their inclusion in the regulatory framework of the Financial Instruments and Exchange Act. Additionally, the name of registered institutions will change from "cryptocurrency asset exchange operators" to "cryptocurrency asset trading operators."
At the same time, the penalties will also be strengthened: for unregistered institutions engaged in sales, the maximum prison sentence will increase from 3 years to 10 years, and the fines will rise from the current maximum of 3 million yen to a maximum of 10 million yen. By increasing penalties, the stance on protecting investors will be further reinforced.
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