Japan Cabinet Signs Off on Bill to Treat Crypto as Financial Instruments
Japan is moving to overhaul its crypto rulebook, with the cabinet approving legislation that would reclassify crypto assets as financial instruments rather than primarily as payment tools. The bill, drafted under the Financial Services Agency's framework, now heads to parliament. If enacted, the revised regime could be implemented by 2027.
The proposal would shift crypto oversight away from the Payment Services Act approach introduced after the Mt. Gox collapse. Officials say the market has evolved: Japan now has more than 13 million crypto accounts, and usage is increasingly investment-driven.
Under the new framework, crypto would be regulated more like traditional securities. Planned measures include mandatory annual disclosures by issuers and a ban on insider trading based on nonpublic information. Industry terminology would also be updated, renaming "crypto asset exchange operators" to "crypto asset trading operators" to better align with conventional finance.
Enforcement would be tightened alongside the reclassification. Operating without a license could carry penalties of up to 10 years in prison, up from three years. Financial penalties would also rise, with fines increasing from ¥3 million to ¥10 million. Regulators have reportedly been receiving hundreds of crypto-related complaints each month, reinforcing the push for stronger investor protection.
Market participants expect the changes to improve transparency and reduce fraud risks, potentially making the sector more attractive to institutional capital. At the same time, higher compliance costs could pressure smaller firms, accelerating consolidation among larger players.
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